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ALYESKA PIPELINE
SERVICE COMPANY
COVERT OPERATION

OVERSIGHT HEARINGS

BEFORE THE

COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED SECOND CONGRESS
FIRST SESSION
ON

ALYESKA PIPELINE SERVICE COMPANY COVERT OPERATION

HEARINGS HELD IN WASHINGTON, DC
NOVEMBER 4, 5 AND 6, 1991

Serial No. 102-13

Printed for the use of the Committee on Interior and Insular Affairs

U.s. GOVERNMENT PRINTING OFFICE
51-877 WASHINGTON : 1991

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-037574-6

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS

House of Representatives

EDWARD J. MARKEY, Massachusetts
AUSTIN J. MURPHY, Pennsylvania
NICK JOE RAHALL II, West Virginia
BRUCE F. VENTO, Minnesota
PAT WILLIAMS, Montana
BEVERLY B. BYRON, Maryland
RON de LUGO, Virgin Islands
SAM GEJDENSON, Connecticut
PETER H. KOSTMAYER, Pennsylvania
RICHARD H. LEHMAN, California
BILL RICHARDSON, New Mexico
GEORGE (BUDDY) DARDEN, Georgia
PETER J. VISCLOSKY, Indiana
JAIME B. FUSTER, Puerto Rico
MEL LEVINE, California
WAYNE OWENS, Utah
JOHN LEWIS, Georgia
BEN NIGHTHORSE CAMPBELL, Colorado
PETER A. DeFAZIO, Oregon
ENI F.H. FALEOMAVAEGA,

American Samoa
TIM JOHNSON, South Dakota
CHARLES E. SCHUMER, New York
JIM JONTZ, Indiana
PETER HOAGLAND, New England
HARRY JOHNSTON, Florida
LARRY LaROCCO, Idaho

RON MARLENEE, Montana
JAMES V. HANSEN, Utah
BARBARA F. VUCANOVICH, Nevada
BEN BLAZ, Guam
JOHN J. RHODES HI, Arizona
ELTON GALLEGLY, California
ROBERT F. SMITH, Oregon
CRAIG THOMAS, Wyoming
JOHN J. DUNCAN, Jr., Tennessee
RICHARD T. SCHULZE, Pennsylvania
JOEL HEFLEY, Colorado
CHARLES H. TAYLOR, North Carolina
JOHN T. DOOLITTLE, California
WAYNE ALLARD, Colorado

GEORGE MILLER, California, Chairman

PHILIP R. SHARP, Indiana

DON YOUNG, Alaska,

Ranking Republican Member
ROBERT J. LAGOMARSINO, California

Daniel P. Beard, Staff Director
Richard Meltzer, General Counsel
Linda Chase, Chief Counsel, Office of Investigations
Jeffrey P. Petrich, Counsel
Sharon Kirby, Chief Clerk, Full Committee
Elizabeth McMillan, Staff Assistant/Clerk, Investigations Unit
David Dye, General Counsel, Minority Staff
Brian Miller, Staff Assistant, Minority Staff
Daniel Val Kish, Republican Staff Director

(II)

CONTENTS

Page

Hearings held:

November 4, 1991 1

November 5, 1991 9

November 6, 1991 205

Tuesday, November 5, 1991

Statements:

Panel consisting of:

William Richey, Esq., Richey, Munroe, Fine, Goodman and Arm-
strong 70

James B. Hermiller, president, Alyeska Pipeline Service Company 105

James Patrick Wellington, manager of corporate security, Alyeska

Pipeline Service Company 114

George R. Wackenhut, chairman and chief executive officer, The Wacken-
hut Company, Coral Gables, Florida 10

Wednesday, November 6, 1991

Statements:

Hamel, Charles, former independent oil broker, Alexandria, Virginia, and

Anchorage, Alaska : 259

Panel consisting of:

William C. Rusnack, senior vice president, Atlantic Richfield Compa-
ny and chairman of the Owners Committee of Alyeska Pipeline

Service Company 206

Fred C. Garibaldi, BP America, and former chairman of the Owners

Committee, 1987 through January 1991 215

Darrell G. Warner, president, Exxon Pipeline Company 221

APPENDIX

November 4, 5 and 6, 1991

Additional material submitted for the hearing record from:

Prepared statements submitted to the Committee on Interior and Insular
Affairs by ex-employees of The Wackenhut Company:

1. Cruz, Mercedes Iliana 281

2. Rich, Sherree 292

3. Jacobson, Ricki Sue - 301

4. Castillo, Rafael G 313

5. Contreras, Ana Maria 323

6. Caputi, Adriana 328

Annual Report of The Wackenhut Company for 1990 342

Corporate Resolution of The Wackenhut Company and memorandum from

James P. Rowan dated Jan. 2, 1991 regarding “Board of Directors Resolu-
tion No. 9 — Compliance with Legal, Ethical and Accounting Standards” and

Policy Statement 389

Envelope addressed to Mrs. Gloria Ewell and enclosure 396

How To Get Anything on Anybody, by Lee Lapin, published by CEP, Incorpo-
rated, Boulder, Colorado 402

Steno Notebook of Richard Lund (F2R445572 through F2R445582) 426

Memorandum from Rick Lund to Wayne B. Black, dated March 30, 1990,

regarding “Trash at Trustees for Alaska.” 437

Affidavit of David Ramirez notarized November 3, 1991 438

(hi)

Page

Memorandum from Wayne B. Black to the file dated May 18, 1990, regarding

“Meeting on [sic] with Investigators on May 18, 1990.” 443

Memorandum from W.B. Black to J.P. Wellington dated May 23, 1990, regard-
ing “Executive Summary of Investigation, with Preliminary Information,
Associations, and Information Flow Charts. Exhibit list, #F2R413437, at-
tached 444

Opinion letter from William L. Richey and Jonathan Goodman, Richey,
Munroe, Fine & Goodman, P.A., to J.P. Wellington, Alyeska Pipeline Serv-
ice Co., c/o Mr. Wayne Black, Wackenhut Company Special Investigations
Division, dated May 22, 1990, regarding “Alyeska Pipeline Service Co. In-
vestigation of Stolen Documents. 453

Handwritten Notes (F2R500020 through F2R500036) 464

Special Services charges on telephone records submitted by Mercedes Cruz in

response to subpoena 481

Memorandum from Wayne B. Black to Pat Wellington dated March 7, 1990,

regarding “Whistleblower.” 482

Memorandum from Rick Lund and Gary Crep to Pat Wellington dated April

23, 1990, regarding “Undercover Investigation Valdez, Alaska.” 483

Letter from Wayne Jenkins, Ph.D., Director of Research (a.k.a Wayne Black)
to Ken Ewell, CEO, Management Information Technologies, Inc., Washing-

“A Report to The Owners Committee of Alyeska Pipeline Service Company,”

dated January 22, 1991, submitted by Paul, Hastings, Janofsky & Walker 500

Letter from R.6. Barr, Director, Auditing and Security, AT&T, Norristown,

NJ, to Linda J. Chase, Chief Counsel on Investigations, Committee on

Interior and Insular Affairs, dated October 25, 1991 603

Letter from Helen F. Fahey, Commonwealth’s Attorney for Arlington County,
Virginia, to The Honorable Don Young, Ranking Minority Member, Com-
mittee on Interior and Insular Affairs, dated November 4, 1991 605

Statement by David Marquez, General Counsel, Alyeska Pipeline Service

Company, November 4, 1991 — 12:30 p.m 606

“Activist law firm awaits Alyeska reply,” The Anchorage Times, September

27, 1991 607

Memorandum from Jonathan Goodman to Bill Richey dated August 31, 1990,
regarding “Criminal Prosecution Memorandum (a.k.a TROSS’ memo)

Alyeska Pipeline Investigation RMF&G File No. 1072-1.” 608

Handwritten notes dated Sept. 25, 1990, “Meeting in Denver.” 609

Joel McIntyre of Paul, Hastings, et al., “Interview with Paul Bilgore,” dated

December 6, 1990, and accompanying notes from interview 613

“Nowhere to Hide,” by Richard Lacayo, TIME, November 11, 1991, pp. 34-40.. 632

News clippings:

1. “EPA completes Alyeska probe after 3 years,” Anchorage Times,

August 17, 1988 640

2. “U.S. Probes Charges of Improper Billing of Buyers of Alaska Pipeline

Crude Oil,” Wall Street Journal 641

3. “Utilities official finds no evidence for broker’s claim against Alyeska,”

Anchorage Daily News, August 12, 1988 642

Dorothy Y. Kirkley, Paul, Hastings, et al., “Interview with J. Patrick Welling-
ton,” dated January 7, 1991 643

Handwritten note from J.P. “Pat” Wellington to Wayne Black dated Feb. 23,

1990 and accompanying material regarding Fredericka Suzann “Riki” Ott:
“Fisherman takes on Alyeska,” Anchorage Daily News February 21, 1988,
and memorandum with attachments from R.B. Iversen to J.P. Wellington

dated February 23, 1988 661

Memorandum from R.B. Iverson to J.P. Wellington dated February 22, 1990,
regarding “Proprietary Information Leak.” Attachments include:

1. Simplified hand drawing of the Valdez Terminal of the Trans-Alaska

Pipeline; 672

2. Alyeska Security Case Report dated Nov. 24, 1987; 674

3. Handwritten memo from J.P. “Pat” Wellington to Wayne Black dated

Feb. 22, 1990 including “Battle rages on between Alyeska, environmen-
talists,” Anchorage Daily News, February 21, 1988; and, 675

Handwritten memo from J.P. “Pat” Wellington to Wayne Black dated Feb.

23, 1990 including memorandum from Charles Hamel to Mr. Robert

Horton, Vice Chairman, British Petroleum 677

Declaration of Friendship between Ahtna, Inc. and Alyeska Pipeline Service
Company, dated May 19, 1990 681

Page

Memorandum from Jonathan Goodman to Bill Richey dated August 21, 1990
regarding “Aug. 20, 1990 T/C with Wayne Black, Alyeska Pipeline Investi-
gation RMF&G File No. 1072-1.” 682

Memorandum from Wayne B. Black to 427 File dated October 5, 1990 regard-
ing “427 Project.” 685

Letter from Karen L. Kilty, Environmental Research Specialist, Alyeska
Pipeline Service Company, to Peter James, Esq., Baker & Hostetler, McCut-

chen. Black, Los Angeles, California, dated July 17, 1990 690

Memorandum to Chairman Miller from Lawrence R. Trotter and Quinn
O’Connell, Alyeska Pipeline Service Company, dated January 31, 1991,

regarding “GAO Audit of TAPS Security.” 707

John P. Burns, Paul, Hastings, “Conference with Paul S. Bilgore and Alfred
T. Smith,” dated October 10, 1990 709

ALYESKA PIPELINE SERVICE COMPANY
COVERT OPERATION

MONDAY, NOVEMBER 4, 1991

House of Representatives,
Committee on Interior and Insular Affairs,

Washington, DC.

The committee met, pursuant to notice, at 9:45 a.m., in room
2226, Rayburn House Office Building, Hon. George Miller (chair-
man of the committee) presiding.

The Chairman. The full committee will come to order for the
purposes of conducting the oversight hearings on the Alyeska
covert actions.

This is the first day of 3 days of hearings before the House Interi-
or Committee on the subject of covert surveillance authorized by
the Alyeska Pipeline Service Company and conducted by The
Wackenhut Company.

On August 7 of this year, the Committee on Interior and Insular
Affairs filed a written request for documents from Wackenhut and
Alyeska in connection with allegations that the Wackenhut Compa-
ny conducted undercover surveillance of Charles Hamel on behalf
of Alyeska and its owner companies.

In letters to both Wackenhut and Alyeska, I expressed concern
that the surveillance of Mr. Hamel was for the purpose of obtain-
ing information on and/or interfering with Mr. Hamel’s communi-
cations with this committee.

Charles Hamel has been a source of information for Congress,
State and Federal regulatory agencies, and the media, concerning
environmental, health and safety violations by Alyeska and its oil
company owners. Mr. Hamel has served as a conduit for whistle-
blowers, including Alyeska employees, to make public information
on oil industry practices. At the same time, Mr. Hamel has at least
two significant business disputes with Alyeska and Exxon.

I want to make very clear that it is not the purpose of these
hearings to determine whether Mr. Hamel, Alyeska or Exxon are
correct in the matter of their lawsuits and business disputes. Nor is
it the purpose of these hearings to examine whether Mr. Hamel’s
various allegations about oil company environmental violations are
true or not. These are matters for another day and other forums.

While the validity of Mr. Hamel’s environmental allegations is
not the focus of these hearings, the fact that Mr. Hamel was an
important source of information for this committee’s ongoing inves-
tigation of the Exxon Valdez oil spill and Alyeska operations is
very relevant.

(l)

In the next two days, we will explore the issue of whether Alyes-
ka’s use of a “bogus* environmental group formed by Wackenhut
spies was an effort to disrupt and compromise a source of informa-
tion for this committee’s continuing investigation of oil industry
practices in Alaska.

These hearings are intended to lay bare the full story of what
happened during the covert surveillance of Mr. Hamel and others.
We also will seek to determine why the spy operation was initiated
and, equally important, why it was terminated.

In my view, it is important to find out why some of the largest
and most powerful corporations in this country would resort to
such elaborate “sting” tactics to invade and destroy the privacy of
Mr. Hamel, Federal and State officials, environmentalists and ordi-
nary citizens.

It has been suggested that the sole purpose of Alyeska’s spying
on Mr. Hamel was simply to recover “stolen documents.” However,
if the explanation was that simple, this committee would not be in-
volved in these hearings. If Alyeska’s sole concern was “stolen doc-
uments,” the laws of this country provide an adequate means of re-
dress in the courts.

We believe that the testimony and the evidence presented in
these hearings during the next two days will show that the covert
surveillance operation involved the much more sinister and dis-
turbing motives of silencing environmental critics and intimidating
whistleblowers.

In the course of the committee’s investigation, we have received
large numbers of documents, electronic recordings and other mate-
rials. At various times, the committee Members have authorized by
unanimous votes the issuance of subpoenas and the use of certain
docments for which attorney-client privilege was claimed.

Our goal has been to conduct a thorough and fair investigation.
We have attempted to accommodate a number of concerns raised
by the witnesses.

In conclusion, I especially want to express my appreciation for
the cooperation that I have received from Congressman Young in
this endeavor.

With that, I will recognize Mr. Young of Alaska.

Mr. Young. Thank you, Mr. Chairman.

I would like to welcome the witnesses and I thank you for calling
this hearing so we can air some of these issues.

I want to congratulate you on your appearance on television last
night. I was almost as surprised that 60 Minutes had a segment on
this investigation as I was to find out that we had a Monday morn-
ing hearing. The timing couldn’t have been better.

I think the whole story needs to get out. Alaskans need to know
what Alyeska did, just what former oil broker Chuck Hamel was
doing to warrant such an investigation. The story has been clouded
by selective leaks through the media. No one can condone the inva-
sion of privacy of Mr. Hamel. We value our privacy in this country.

I hope to learn in these hearings whether the chairman and his
staff were the target of investigations by Alyeska.

I want to be on the record as being in favor of establishing some
guidelines for future investigations by this committee. The chair-
man will agree with me it has not been a smooth process. We need

to sit down and hammer out some rules for such investigations in
the future.

I understand the chairman’s interest in this matter is extremely
personal as well as professional. He believes that he and a member
of his staff were the targets of the investigation. Nevertheless, I
think we must be able to divorce ourselves from our personal inter-
ests in these matters when it comes to potential criminal charges
before this committee.

In closing, I want to welcome our witnesses, and ask unanimous
consent that Members be permitted to introduce into the record
such documents that were produced to the committee as may be
needed to question the witnesses.

Thank you, Mr. Chairman.

The Chairman. Thank you.

In response to your request, I think that is the way we will pro-
ceed, but I think we would reserve the right to object if necessary
to the introduction of a document. But it is our intention for our
discussions that documents will be introduced into the record, that
Members of the committee need or desire to question witnesses. So
I am in agreement with you. We will go forward with that, by
unanimous consent.

Mr. Gejdenson.

Mr. Gejdenson. I would like to make a brief statement. This is
for me the second instance where the heavy hand of a large corpo-
ration in Alaska feels that it can operate beyond the law and
almost as if it is a tyrannical government on its own. We had Flor-
ian Sever who worked for a pulp company in Alaska and was fired
because he spoke our about conditions of the workers there. And
this may be the finest example of the excess of the 1980’s where
the corporations felt they could do it all, and had a right to take
virtually any action, whether trying to intimidate workers who
want to see the laws followed on environmental areas or labor law,
or even obviously Members of Congress.

So I applaud the chairman for holding this hearing, and pursu-
ing it, because it is not just this one instance that we are dealing
with here. There has got to be a message to other companies that
feel that they are above the law, that they have a right to take
almost any action to protect their profits.

The Chairman. Any other Members who desire to make an open-
ing statement?

Mr. Taylor. Mr. Chairman, I am concerned about what has hap-
pened and what we seem to be investigating. We find ourselves
today here ready to beat up on a large oil consortium, if not for
illegal acts at least acts that people would perceive as an invasion
of privacy. It is a congressional committee’s dream, I know, but
there are troubling questions that I have about — and I hope this
committee will get to the bottom of it — about the company’s claim
that there were illegal documents being taken illegally from them
and passed on to congressional committees.

The corporations that we are talking about here today are not
above the law and should not be looked at as being above the law,
but neither should Congress or congressional committees and
staffs. And I think we have all fought for centuries to establish a
government of laws and not men, and I hope we look very carefully

at all the actions here to see that neither side has abused the proc-
ess and the equal protection of the laws,, even for oil companies and
large corporations.

The Chairman. Mr. Richardson.

Mr. Richardson. Mr. Chairman, thank you. I, too, saw you on
television last night, and I must say this was the first acquaintance
I had to the issue other than supporting you in your efforts to get
to the bottom of this issue.

I think the committee’s role here is legitimate. I am uncertain
about the outcome of my conclusions on this hearing. I stay open
minded. But I think in terms of the issues that you have raised, the
potential investigation of Members of Congress and other areas
that are within the committee's jurisdiction, I think it is the proper
role of this committee to be doing what it is doing.

The Chairman. Any further statements?

If not, we will call the first witness for this morning’s hearing,
that is, Mr. Wayne B. Black, vice president, Investigations, The
Wackenhut Company, Cored Gables, Florida.

The Chairman. Mr. Black, if you will come forward, it is the
practice of this committee to swear all witnesses who appear before
it at investigative hearings. Do you have any objections to being
sworn?

Mr. Black. No, sir.

The Chairman. Do you solemnly swear or affirm that the testi-
mony you are about to give is the truth, the whole truth and noth-
ing but the truth?

Mr. Black. I do.

The Chairman. In order to inform you of your rights as a wit-
ness before the committee and the limitations of the authority of
the committee, the Rules of the House of Representatives and the
committee are on the table in front of you. Both sets of rules have
been previously provided to you.

The role of counsel is to advise you of your constitutional rights.
Do you desire to be represented by counsel?

Mr. Black. Yes, Mr. Sale, S-a-l-e, Jon.

The Chairman. Mr. Black, welcome to the committee. First, if
we might, could you tell us your educational background after high
school?

Mr. Sale. We have written a letter. We would like to invoke rule
12(f)(2), and request all cameras and microphones be turned off.
Mr. Black does not wish to be photographed or have his picture
t ak pn

The Chairman. That is the right of Mr. Black under Rule 12 of
the committee since he is a subpoenaed witness.

At this time, all photographing will cease, and the cameras will
be turned off during the questioning of Mr. Black before the com-
mittee.

Mr. Sale. Mr. Chairman, we have one other procedural matter
before you proceed. We would also like to invoke rule ll(k)(5) of the
House Rules. Our position is that evidence or testimony at this
hearing may tend to defame, degrade, on incriminate Mr. Black,
and we are making this assertion in good faith. We are basing it on
items such as the chairman’s memorandum of September 24, which
has been distributed to Members, which accuse Mr. Black of violat-

ing Federal and State criminal laws, and similar allegations have
been repeated in the Wall Street Journal on Friday and 60 Minutes
last night. And we think that fundamental fairness requires that
the committee take Mr. Black’s testimony in executive session, and
we request that this hearing be held in executive session, because
of the reasons previously stated under that rule.

Mr. Lagomarsino. I understand your ruling was that cameras be
turned off. I see one in the back with a red light on. And one
in

The Chairman. At the moment, we are engaged with Mr. Black’s
attorney. I think to facilitate turning off the cameras, the commit-
tee should recess for about 3 minutes so that we can allow that to
be done by people in the outside and the people on the outside of
the room.

Mr. Gejdenson. Mr. Chairman, I am not sure as to where the
rules are, but the question I have is, should we finish with other
legal motions or requests of Mr. Black’s attorney, or do the cam-
eras get shut off immediately?

The Chairman. I think out of fairness to Mr. Black, the cameras
should be shut off immediately. It is his right as a subpoenaed wit-
ness before this committee.

So I would ask that those who have the capability to turn off the
cameras, turn them off now, and we will recess for 3 minutes so
the people in the halls can make necessary arrangements.

[After recess.]

The Chairman. The committee will reconvene.

Mr. Sales, as I understand it, your assertion is, again, what, that
the testimony or the hearings would tend to defame your client.
What is your reading of the rule again?

Mr. Sale. Mr. Chairman, it is our position that any testimony
from Mr. Black, or in fact anything, any testimony in this entire
hearing, in the words of the rule, may tend to defame, degrade, or
incriminate Mr. Black, and that is why we invoke the House Rule
as well as Rule ll(kX5) of the House Rules and Rule 5(b) of the
rules of this committee, and our position is that the entire proceed-
ing would have that effect upon Mr. Black. So our request is that
the entire proceeding be executive session.

The Chairman. I think it is my understanding that the purpose
of going into executive session with respect to Mr. Black is so that
Mr. Black can take the fifth amendment. There is nothing in
taking the fifth amendment that would tend to incriminate,
defame or otherwise prejudice Mr. Black. That is his right under
the Constitution.

Mr. Sale. Mr. Chairman, I know that that is the law and that no
adverse inference should be drawn against Mr. Black from doing
that, and that is — and Mr. Black has nothing to hide, but I am
afraid that when that is reported, it is not always reported that
way, and that is why I think he has a right to do that in private.
And I am not even sure that should be stated in public, but that is
already done, with all due respect.

The Chairman. With all due respect, that is the law. That is the
law and his constitutional right and that does not prejudice him
that. It is a choice that he has under the Constitution to freely
assert, and I would deny the request.

Mr. Rhodes. Mr. Chairman, I believe that under the rules, if a
witness has requested action under clause 2(kX5) of Rule 11, that
requires a formal action on the part of the committee, and there-
fore I move that pursuant to clause 2(kX5), Rule 11, and the request
of the witness, that the committee receive testimony in executive
session.

The Chairman. The gentleman is correct in placing his motion
before the committee.

The question is on the motion by the gentleman from Arizona.
All those in favor will say aye. Those opposed, no.

Mr. Rhodes. Mr. Chairman, I request a division.

The Chairman. The division is requested. All those in favor of
the motion by the gentleman from Arizona will signify by raising
their hands.

Those opposed

Mr. Gejdenson. Mr. Chairman, is it necessary to have a quorum
for such a vote?

The Chairman. Yes, it is. On A, no, you don’t. But, on the ques-
tion of going into executive session, it does require a forum.

Mr. Gejdenson. So what we will now have is a vote for those
who want to hear in public the statements by Mr. Black. If those of
us who are in favor of that will lose, Mr. Chairman, will we then
have an opportunity to try and get a quorum?

The Chairman. And request a roll call.

Mr. Gejdenson. Do you want to complete the vote, then?

The Chairman. The vote is 8 to 5 in favor of the motion by Mr.
Rhodes.

Do you want a roll call?

Mr. Gejdenson. Yes.

The Chairman. A roll call is demanded. Those in favor of a roll
call, please raise your hands. The clerk will call the roll.

Mr. Gejdenson. Again, Mr. Chairman, a yes is to go

Mr. Young. We are in the process of having a vote, I believe, and
it cannot be discussed until after the vote is taken.

The Chairman. The gentleman is right.

Mr. Young. Let’s get on with the show.

Mr. DeFazio. We can get on with the show if we meet in public .

The Chairman. The clerk will call the names of the Members of
the committee. We have to get the clerk.

[After recess.]

The Chairman. The committee will reconvene, and the roll call
has been requested.

Under the rule of the committee, a majority of Members present
and voting is required for the purposes of going into executive ses-
sion. And the clerk will call the roll of the Members.

The Clerk. Mr. Sharp?

[No response.

The Clerk. Mr. Markey?

[No response.

The Clerk. Mr. Murphy?

[No response.]

The Clerk. Mr. Rahall?

[No response.]

The Clerk. Mr. Vento?

[No response.

The Clerk. Mr. Williams?

[No response.

The Clerk. Ms. Byron?

[No response.

The Clerk. Mr. De Lugo?

[No response.

The Clerk. Mr. Gejdenson?

Mr. Gejdenson. Mr. Gejdenson votes no.
The Clerk. Mr. Kostmayer?

[No response.]

The Clerk. Mr. Lehman?

[No response.]

The Clerk. Mr. Richardson?

Mr. Richardson. No.

The Clerk. Mr. Darden?

[No response.]

The Clerk. Mr. Fuster?

[No response.

The Clerk. Mr. Levine?

[No response.

The Clerk. Mr. Owens?

[No response.]

The Clerk. Mr. Lewis?

[No response.]

The Clerk. Mr. Campbell?

[No response.]

The Clerk. Mr. DeFazio?

Mr. DeFazio. No.

The Clerk. Mr. Faleomavaega?

[No response.

The Clerk. Mr. Johnson?

[No response.

The Clerk. Mr. Schumer?

[No response.

The Clerk. Mr. Jontz?

Mr. Jontz. No.

The Clerk. Mr. Hoagland?

[No response.]

The Clerk. Mr. Johnston?

[No response.]

The Clerk. Mr. LaRocco?

[No response.]

The Clerk. Mr. Abercrombie?

[No response.]

The Clerk. Mr. Dooley?

[No response.]

The Clerk. Mr. Young?

Mr. Young. Yes.

The Clerk. Mr. Lagomarsino?

Mr. Lagomarsino. Aye.

The Clerk. Mr. Marlenee?

[No response.]

The Clerk. Mr. Hansen?

[No response.]

The Clerk. Ms. Vucanovich?

Ms. Vucanovich. Yes.

The Clerk. Mr. Blaz?

Mr. Blaz. Yes.

The Clerk. Mr. Rhodes?

Mr. Rhodes. Aye.

The Clerk. Mr. Gallegly?

[No response.]

The Clerk. Mr. Smith?

[No response.]

The Clerk. Mr. Thomas?

[No response.]

The Clerk. Mr. Duncan?

[No response.]

The Clerk. Mr. Shulze?

[No response.]

The Clerk. Mr. Hefley?

Mr. Hefley. Aye.

The Clerk. Mr. Taylor?

Mr. Taylor. Aye.

The Clerk. Mr. Doolittle?

[No response.]

The Clerk. Mr. Allard?

Mr. Allard. Aye.

The Clerk. Mr. Baker?

[No response.]

The Clerk. Mr. Miller?

The Chairman. No.

The clerk will announce the vote.

The Clerk. The vote is five nays, eight ayes.

The Chairman. The vote is eight in the affirmative of going into
executive session, no in the negative, and the committee will recess
for the purposes of going into executive session at the call of the
chair.

Mr. Gejdenson. Mr. Chairman

The Chairman. And with that we will ask that the room be
cleared.

Mr. Gejdenson. The committee is going into executive session to
discuss the issue at hand; is that correct?

The Chairman. Seeing as how everyone is frozen in place, could
we ask that the committee staff start to clear the room?

[Recess.]

ALYESKA PIPELINE SERVICE COMPANY
COVERT OPERATION

TUESDAY, NOVEMBER 5, 1991

House of Representatives,

Committee on Interior and Insular Affairs,

Washington, DC.

The committee met, pursuant to call, at 9:45 a.m. in room 2226,
Rayburn House Office Building, Hon. George Miller (chairman of
the committee) presiding.

The Chairman. The Committee on Interior and Insular Affairs
will come to order for purposes of continuing our oversight hearing
on the Alyeska Pipeline Service Company’s covert operations.

Is there any statement anybody would like to make?

Mr. Young. Mr. Chairman, I would like to again welcome all the
witnesses and the patience of this audience that were excluded
from these hearings yesterday. There is some confusion about the
committee’s action. Let me say the committee is obligated under
the rules to consider requests by the witnesses, and I think the
chairman has spoken very clearly on this.

The consideration we gave to such requests should include
whether or not there has been allegations of wrongdoing and fair-
ness of the process. Since there had been allegations in the print
and electronic media about Mr. Black and Mr. Lund, we felt it was
their right to a fair trial and under the Constitution it should be
protected.

I am sure all the members of the audience would appreciate the
same respect for their rights if they were in a similar situation. We
must not lose sight of the fact we seek to get to the bottom of this
matter. We must not forget that. We are after all sworn to uphold
the Constitution and I believe this committee has done that.

I know it was inconvenient for many of the witnesses who waited
to be on the panel today, but yesterday we were also faced with the
problem of having to vote about every 10 minutes on some frivo-
lous dead bill anyway. It shows how this system works. I do apolo-
gize for that delay, but we are here today, we have all day and let’s
get on with the testimony.

The Chairman. Any statement from other Members of the com-
mittee?

If not our first witness this morning is Mr. George Wackenhut,
who is chairman and CEO of The Wackenhut Company out of
Coral Gables.

Mr. Wackenhut, if you will come forward, please.

( 9 )

It is the practice, Mr. Wackenhut, of this committee to swear all
witnesses who appear before it at investigative hearings. Do you
have any objection to being sworn?

Mr. Wackenhut. None whatsoever, sir.

[Witness sworn.]

The Chairman. Thank you.

In order to inform you of your rights as a witness before the com-
mittee and the limitations of the authority of the committee, the
Rules of the House of Representatives and the committee are on
the table in front of you.

Both sets of rules have previously been provided to you. You are
advised of your right to counsel. The role of counsel would be to
advise you of your constitutional rights if you desire to be repre-
sented by counsel.

Mr. Wackenhut. Yes, my attorney is right here with me.

The Chairman. If you would identify yourself.

Mr. Baldwin. Thank you, Mr. Chairman. My name is Greg Bald-
win. I am an attorney with the law firm of Holland & Knight.

The Chairman. Thank you. Mr. Wackenhut, go ahead and pro-
ceed with your statement.

STATEMENT OF GEORGE WACKENHUT, CHAIRMAN AND CEO, THE
WACKENHUT COMPANY, CORAL GABLES, FLORIDA

Mr. Wackenhut. Good morning Mr. Chairman, Congressman
Young and Members of the committee.

I am George Wackenhut, chairman of the board and chief execu-
tive officer of The Wackenhut Company. Mr. Chairman, last
Wednesday I delivered to you copies of three documents. I would
like now to have them formally entered into the record.

They are: The 1990 Annual Report of the Wackenhut Company,
the resolution passed by the board of directors on Monday, October
28, 1991, and a statement of policy adopted several years ago set-
ting forth ethical and moral standards for the conduct of business
by the company. [See pages 342-395.] I would like also to preserve
the right to supplement the record at a later date.

The Chairman. Without objection, the documents you referred to
will be entered into the record. The hearing record will be held
open for a specified period of time, but that has not yet been deter-
mined.

Mr. Wackenhut. Thank you.

Mr. Chairman, I filed in advance a detailed statement which con-
tains information I would very much like the committee to consid-
er. While I will not repeat here what I said there, I specifically
want today to emphasize three topics: First, your committee staff
indicated to us that they believe that top management in Wacken-
hut did not approach this committee’s investigation with the appro-
priate degree of seriousness.

Approximately 8 weeks ago, in response to this committee’s re-
quest for information and a consequent reporting by numerous
newspapers on our alleged corporate activities, Wackenhut engaged
outside counsel to conduct a full internal review and report on the
1990 investigatory events.

Our attorneys rapidly assembled a team of eight lawyers with at
least three lawyers working full time to conduct an investigation of
the entire engagement. In less than 2 weeks after the pertinent
material became available to them, our attorneys digested a mas-
sive amount of information in an effort promptly to respond to this
committee’s inquiries and ultimately to produce a preliminary
report thereon to our management.

That effort, while ongoing, is now substantially complete.

Personally, Mr. Chairman, since receipt of your August 7 letter,
all my concentration, as well as the valuable resources and efforts
of my employees, has been focused on this hearing. I am consumed
with the magnitude of this process and unquestionably it has had
my full attention. I have very much taken your inquiry seriously.

The board of directors of The Wackenhut Company, the weekend
before last, received a preliminary report by our outside counsel.
Their reaction, too, was solemn and concerned. Indeed the board of
directors spent more time on this particular matter than they have
on any other matter and any other business concern in the 37-year
history of the company.

A brief review of what The Wackenhut Company has done be-
tween August 7 and the present puts its delay and silence into a
perspective which I believe will demonstrate that Wackenhut has
taken this committee and its investigation very seriously indeed.
The prompt production of documents relevant to The Wackenhut
Company’s 1990 investigation conducted on behalf of Alyeska was
not easy.

On April 16, 1991, almost 4 months prior to this committee’s re-
quest, Alyeska requested us to deliver to the law firm of Paul,
Hastings, Janofsky & Walker in Los Angeles the investigative file
and materials that The Wackenhut Company produced or collected
during the 1990 investigation.

We complied with Alyeska’s request after they agreed to main-
tain these records for a period of 10 years and make them available
to us for legitimate inquiries. That agreement with Alyeska de-
layed us in providing that privileged documentation sooner to this
committee. Our own internal investigation of this matter has been
delayed, too.

Alyeska authorized The Wackenhut Company on October 1, 1991,
to release information fully to comply with this committee’s re-
quest for documents. Alyeska then promptly delivered back to
Wackenhut copies of some of the documents we had originally sent
to the law firm in Los Angeles.

For the first time, The Wackenhut Company was in a position,

practically speaking, to provide the requested materials to this
committee and 3 days later — specifically on October 4, 1991 — we
produced every document we could find in response to the congres-
sional subpoena.

In addition to the management of Wackenhut requesting our out-
side legal counsel to review every facet of the investigation, the
board of directors of Wackenhut also has itself established an inde-
pendent board/committee which will — separate and apart from the
management review I instituted — fully review to its own satisfac-
tion all the claims and allegations raised relating to the Alyeska
investigation.

This independent board/committee will then present a recom-
mendation to the full board of directors specifically stating what, if
any, remedial actions are necessary.

Second, the methods of undercover surveillance used by Wacken-
hut in the 1990 investigation are traditional and standard investi-
gative techniques commonly used in private investigations. Infor-
mation was obtained throughout the investigation using video and
audio surveillance to tape meetings and telephone conversations in
Virginia between Mr. Charles Hamel and our investigators.

Wackenhut knew that the only task was to identify the source of
the Alyeska corporate documents in his possession in a manner
that would permit the initiation of litigation against those persons
responsible.

It was obvious that any illegal conduct by us would be counter-
productive when the evidence and documents produced were ulti-
mately to be turned over to a court.

Again, the purpose of this investigation, as far as Wackenhut
was concerned, was only to identify the persons stealing documents
and information from Alyeska so that an appropriate criminal and
civil action could be brought against those persons. To that end,
they carefully sought out and received legal counsel to preserve the
integrity of the investigation.

Third, Mr. Chairman, contrary to reports, let me categorically
state that Wackenhut did not conduct a covert investigation of you,
your staff, any Member of your committee, or any other Member of
Congress. I personally believe that any statement or inference to
the contrary is absolutely false. I am convinced that it did not
happen.

My outside lawyers advise me they would wholly agree. The only
inquiry about any Congressman conducted by Wackenhut in the
Alyeska investigation was confined to a single trip to the public li-
brary.

Based upon the information given to me by our outside law firm,
it is indisputable that on May 16, 1990, Mr. Hamel admitted to the
investigators that he was receiving documents belonging to
Alyeska. It was only from Charles Hamel that our investigators
frequently heard the name George Miller.

Mr. Hamel said then that he and George Miller intended to set
up the president of Alyeska, James Hermiller, at a hearing sched-
uled before this committee. Once Mr. Hamel first mentioned a
Member of Congress, Wayne Black immediately and properly
sought legal advice from a prominent Miami attorney, William
Richey.

Mr. Richey, as I understand it, will testify later today, but it is
my further understanding that he unfailingly advised our investi-
gators on the legality of each of their investigatory activities.

After I received the letter of August 7 from the committee, I got
great satisfaction from a visit I had with Mr. Richey in which he
told me that he knew of no illegality connected with the investiga-
tion and that I should be proud of the Wackenhut investigators,
“who had conducted as fine an investigation as he has ever seen.”
Among Mr. Richey’s firm advice to our investigators was not to in
any way investigate a Congressman.

I am sure he will reaffirm that advice. Suffice it to say, the only
action taken by Wackenhut to investigate George Miller after re-
ceiving that instruction was for Mr. Richey to look up information
in a library at his request. That was the beginning and that was
the end of Wackenhut’s investigation of any Congressman.

When Wackenhut began the investigation, Alyeska told Wacken-
hut that corporate sensitive documents were being taken from
Alyeska and that the minutes of secret internal Alyeska meetings
were being leaked to the press and others. Our assignment was to
determine who appropriated the documents from within Alyeska’s
corporate offices.

It is now absolutely clear that the name of Charles Hamel sur-
faced at the very beginning of the investigation as a top operative
in the receipt of the stolen documents.

Our recent review efforts have clearly affirmed to us that at no
time during the course of our investigation was any Member of
Congress under surveillance, visually or telephonically, or was any
Member of Congress being investigated in any other way, shape or
fashion.

At no time was the telephone of any Member of Congress ever
tapped. I am and always have been very disturbed about the con-
cerns raised by this committee. However, I believe that many
people have grossly exaggerated our conduct and the facts of the
investigation.

Be assured Wackenhut will continue to scrutinize its investiga-
tors’ conduct and methods of operations during the entire 1990 in-
vestigation until all legitimate future concerns are satisfactorily
and permanently resolved.

The reputation developed by this company throughout the
Nation during the past 37 years demands no less. It is my purpose
to do all that is needed to keep that reputation unblemished.

Gentlemen, thank you for this opportunity to address this com-
mittee. I now stand ready to take questions.

[Prepared statement of Mr. Wackenhut follows:]

GEORGE R. WA CKEN H U T

CHAIRMAN AND CHIEF EXECUTIVE OFFICER
THE WACKENHUT CORPORATION
CORAL GABLES, FLORIDA

Good morning Mr. Chairman and Members of the Committee. I
am George R. Wackenhut, founder. Chairman oi the Board, and Chief
Executive Officer of The Wackenhut Corporation, headquartered in
Coral Gables, Florida. Prior to establishment of the corporation
37 years ago, I was a Special Agent with the Federal Bureau of
Investigation. The Wackenhut Corporation has grown into one of
the world’s largest total security services firms with over $500
million in sales in 1990. We are a publicly traded corporation
on the New York Stock Exchange, and currently employ over 45,000
dedicated employees. The Wackenhut Corporation maintains over
150 offices and facilities throughout the United States,
including 34 states and the District of Columbia, and has
operations in Canada, the United Kingdom, Western Europe,
Australia, Africa, the Middle East, the Far East, Central and
South America and the Caribbean.

The Wackenhut Corporation is divided into three distinct
operating groups: Domestic Operations Group; Government Services

Group; International Operations Group. Cumulatively, they
provide total security systems and services to business,
industry, professional clients, and to various agencies of the
u.s. Government. These services include uniformed guards,
systems engineering and design, investigations, executive
protection, support services, crisis management, and loss
prevention surveys, just to name a few. Of primary importance to
the committee this morning is the conduct and operations of our

Domestic Operations Group upon which I shall now focus my
attention.

One of our clients in the Domestic Operations Group is
Alyeska Pipeline Services Company. We are under contract with
Alyeska to protect the 800 mile long Trans-Alaska Pipeline and
two north slope oil fields in Alaska. This contractual
relationship has existed for over 17 years, and we are
justifiably proud of our unblemished record of service over that
period of time.

Wackenhut has worked long and diligently to cultivate and
preserve our reputation of integrity and professionalism with
all of our clients, including Alyeska. Wackenhut, however, would
not jeopardize its good corporate name for any client or
investigation .

When Domestic Operations was asked to conduct an
investigation to determine how Alyeska documents and information
were being obtained and transferred to unauthorized persons,
Wackenhut felt a certain obligation to comply. Senior Wackenhut
management delegated responsibility of the case to its Special
Investigations Division.

The Special Investigations Division, a unit of the Domestic
Operations Group, was created in late 1989 to fill a critical
role in the total security services program. It was created for
two very important reasons. First, because of the well
publicized and documented rise in commercial and industrial
espionage, and second, because current and prospective clients

were asking for assistance with covert operations, a new
dimension in security protection services. The Alyeska
investigation, begun in March 1990, was to be the Special
Investigations Division's first major investigative case. The
Special Investigations Division is not yet economically
significant for The Wackenhut Corporation — specifically, the
revenue generated by the Alyeska investigation was about
$288,000, which comprised less than one-fifth of one percent of
Wackenhut' s entire gross revenues for the year 1990.

We formed the Special Investigations Division by our
acquisition of a private investigative firm owned by Wayne Black
("Black") , and he was put in charge of this new Division. Black
had long and extensive experience in handling confidential
undercover investigations. Black started his career as a police
officer in the Dade County Sheriff's Department and later worked
as an investigator for the State Attorney's Office in Miami.
Throughout his career, he also gained extensive experience in
conducting and supervising investigations. Black selected as his
chief assistant an experienced investigator, Rick Lund ("Lund").
Lund is a former police detective and currently teaches special
courses on investigative techniques to U.S. Government agents.

Black was placed in charge of the day-to-day operations of
the Alyeska investigation. His immediate supervisor was Mr. Alan
Bernstein, Executive Vice President - Domestic Operations. As
this was a new program for us, we relied heavily on Black's
experience and expertise in operating an undercover operation.

Without going into great detail about the investigation
itself, Mr. Chairman, I would like to take my remaining time
specifically to address three topics that are of the utmost
concern to you and to Wackenhut.

FIRST :

Mr. Chairman, contrary to media reports, let me
categorically state that Wackenhut did not conduct a covert
investigation of you, your staff, any member of your Committee or
any other Member of Congress. Any statement or inference to the
contrary is false. It did not happen .

The only investigation conducted of any congressman was
confined to a single trip to the public library.

Black was following a trail of stolen documents and that
trail led directly to Charles Hamel. On May 16, Hamel admitted
to the investigators that he was receiving documents stolen from
Alyeska. It was from Charles Hamel that the investigators first,
and frequently, heard the name George Miller. Hamel said that he
and Chairman Miller intended- to "set-up" the president of
Alyeska, James Hermiller, at a hearing scheduled before this
Committee. Hamel claimed he would supply Chairman Miller with
information from stolen Alyeska documents so that Chairman Miller
would be asking questions to which he already knew the answers
based upon the stolen Alyeska documents. Once Hamel mentioned a
Member of Congress, Black immediately sought legal advice from a
prominent Miami attorney, William Richey.

On Hay 17, Richey advised Black against pursuing any
investigation of a congressman, and asked Black to find out who
Congressman George Miller is so that he could have some context
into which to place Hamel's claims. On the following day.

May 18, Black drafted a memo to Ricki Jacobsen, a Wackenhut
investigator, requesting her to review various public records to
learn about Congressman Miller and his Committee. Jacobsen went
to the Dade County Public Library on Monday, May 21, copied the
information available and gave it to Richey. While these actions
may be considered investigative, they were pursued in response to
a request from the attorneys to identify Congressman Miller and
were confined to publicly available resources.

That was the beginning and end of Wackenhut' s investigation
of any congressman.

When Wackenhut began the investigation, Alyeska told us
only that corporate-sensitive documents were being taken from
Alyeska, and that the minutes of secret internal Alyeska
meetings were being leaked to the press and others. Our charter
was to determine who appropriated the documents from within
Alyeska 's corporate offices. From the very beginning of the
operation, the name of Charles Hamel surfaced as a top operative
in the transmission of the stolen documents. As soon as Hamel
mentioned your name, the investigator went to a lawyer.

There was a postscript to this decision reached between
Wackenhut investigators and Mr. Richey. If at any time George
Miller or any Member of Congress were ever to meet fact-to-face.

or by telephone, the Wackenhut investigator would immediately
introduce himself to the Member and explain the investigation.

At no time during the course of our investigation was any Member
of Congress under surveillance, visually or telephonically , or
being investigated in any other way, shape or fashion. At no
time were the telephones of any Member of Congress ever tapped.

SECOND :

The methods of undercover surveillance used by Wackenhut
employees in the 1990 investigation are traditional and standard
techniques commonly used in the significant private
investigations. Information was obtained throughout the
investigation using video and audio surveillance to tape record
meetings and telephone conversations in Virginia between Mr.
Hamel and our investigators. Wackenhut investigators knew that
their principal task was to identify the source of the stolen
corporate documents in a manner that would permit the initiation
of litigation against those persons responsible for stealing
documents from Alyeska. Black and Lund always knew and
acknowledged that any illegal conduct by them would be
counterproductive if the evidence and documents produced were
ultimately turned over to a court.

The sole purpose of this investigation, as far as we were
concerned, was to identify the persons stealing documents and
information from Alyeska and to bring the appropriate criminal
and civil action against those persons.

Given the fact that the purpose of the investigation was to
bring the perpetrators to justice, it is only common sense that
the investigators would consistently strive to operate within the
law. Indeed, their actions demonstrate this. They carefully
sought out and received legal counsel to preserve the integrity
of the investigation.

THIRD :

Your Committee staff indicated that they believe Wackenhut
top management in Florida did not approach your investigation
with the appropriate degree of seriousness.

A brief review of what The Wackenhut Corporation has done
between August 7 and the present will put its enforced silence
into a perspective which will demonstrate that The Wackenhut
Corporation has taken this Committee and its investigation very
seriously indeed.

Let me say quite candidly, Mr. Chairman, this is the first
time any Wackenhut operation, or any Wackenhut executive has been
investigated by a congressional committee. The first time that I
became aware of any questions about the conduct and findings of
our investigation occurred when I received your letter of
August 7 requesting information and documentation on the Alyeska
investigation.

The August 7 letter requested the production of documents
relevant to The Wackenhut Corporation's 1990 investigation
conducted on behalf of Alyeska. On April 16, 1991, almost four

months prior to this Committee's request and pursuant to
Alyeska's written request, we delivered pursuant to Alyeska's
written request, to the law firm of Paul, Hastings, Janofsky &
Walker in Los Angeles, the investigative file and materials that
The Wackenhut Corporation produced or collected during the 1990
investigation. Again, I emphasize this was done at Alyeska's
demand. We had been specifically instructed not to keep any
copies of those materials.

Moreover, a Florida law and our contractual obligation to
Alyeska required us to maintain strict confidentiality on this
matter. We were hindered from discussing our activities or
providing privileged documentation to this Committee until we
received a limited waiver of the confidentiality privilege from
Alyeska .

Thus, in addition to the constraints of our legal and
contractual obligations, we were physically unable to respond to
Chairman Miller's August 7th request because we had complied with
our client's earlier request and sent all the identified
documentation to the law firm in Los Angeles. Our own internal
investigation of this matter has suffered as a result of our
exportation of essentially all of those materials and
consequently, the delay in their return to us.

In response to our repeated requests, Alyeska authorized The
Wackenhut Corporation on October 1, 1991, to release information
to comply with this Committee's request for documents. Alyeska
then delivered back to The Wackenhut Corporation copies of some

of the documents that we had originally sent to the lav firm in
Los Angeles. Finally, The Wackenhut Corporation was in a
position, both legally and practically speaking, to provide
material to this Committee and two days later, on October 4,

1991, we produced every document we could find in response to the
congressional subpoena.

Finally, in any large corporation of 45,000 employees like
Wackenhut, it is extremely difficult to be intimately involved
with everything that is ongoing at any given moment. Wackenhut
has retained an outside law firm to review every facet of the
investigation. Also, the Board of Directors of Wackenhut has
established an independent board committee which will fully
review all the allegations of wrongdoing. This independent board
committee will present a recommendation to the full Board of
Directors, whether to consider necessary remedial actions and
corrective policy decisions, if warranted.

I am very disturbed about the concerns raised by this
Committee. However, I believe these allegations have been
grossly exaggerated. Nevertheless, we will continue to
scrutinize our conduct and methods of operations during the 1990
investigation until all legitimate concerns are satisfactorily
resolved.

I now stand ready to take questions.

06266-38 oraltest:wpl55

The Chairman. Thank you, Mr. Wackenhut, very much for your
testimony.

Let me ask you a couple of questions. As I understand it from
your testimony, your company is divided into three divisions; is
that correct? You have an international division, a domestic divi-
sion and a governmental operations division?

Mr. Wackenhut. Yes, sir, three operating units. Right.

The Chairman. And you have other programs — you have the
silent witness program, the special investigations division. They do
work for whom?

Mr. Wackenhut. They report to the operations group.

The Chairman. So they work for the international division, the
domestic division, the governmental division?

Mr. Wackenhut. They work just for the operations group, the
domestic operations group.

The Chairman. Domestic operations group. They do not do work
for the other two?

Mr. Wackenhut. Not generally, sir.

The Chairman. Well, do they sometimes?

Mr. Wackenhut. You mentioned silent witness and what was
the other?

The Chairman. And special investigative.

Mr. Wackenhut. No, they are strictly domestic operations.

The Chairman. So they do not do work for those other two?

Mr. Wackenhut. No, sir.

The Chairman. This contract came to you, how, for the Alyeska
surveillance?

Mr. Wackenhut. The director of security for Alyeska ap-
proached Mr. Bernstein, our executive vice-president, when he was
in Alaska last winter, winter before last, the winter of 1990 and ex-
plained to him they were having this problem with loss of docu-
ments.

Did we have the capability to do an investigation for him? He
stated that we had recently hired Mr. Black and he had set up this
special investigations group and he thought we did have that capa-
bility.

The Chairman. Was this the first contract for the special investi-
gative unit?

Mr. Wackenhut. No, certainly not the first. There had been
many investigations conducted prior to that time.

The Chairman. How many investigations?

Mr. Wackenhut. I would have no way to know, sir.

The Chairman. How long had the unit been in existence?

Mr. Wackenhut. I think we started it in November 1989. So, it
was in operation about 3 or 4 months at that point in time.

The Chairman. Would this investigation, as you have character-
ized it, be characteristic of the investigations in the special investi-
gative division?

Mr. Wackenhut. I wouldn’t categorize it as ordinary. It was cer-
tainly above that. It was a special, special investigation, but

The Chairman. Why was this a special, special investigation?

Mr. Wackenhut. A very long and valued client of ours, Alyeska,
had asked us to conduct it and we wanted to do it to the very best
of our ability.

The Chairman. You do other work for Alyeska; is that correct?

Mr. Wackenhut. Yes, sir. We have the security on the pipeline.

The Chairman. That is under what company?

Mr. Wackenhut. That is under a company, subsidiary known as
American Guard & Alert, wholly owned subsidiary of Wackenhut.

The Chairman. They provide what services to Alyeska?

Mr. Wackenhut. Security and safety, primarily. We run helicop-
ters over the pipeline looking for leaks or anybody that would be in
the area that shouldn’t be there, and that sort of thing, plus guards
at the pump stations and guards up at Prudhoe Bay.

The Chairman. So is it beyond the pipeline? Do you also take
care of the facilities at Prudhoe Bay and the Alyeska terminal?

Mr. Wackenhut. Yes, there is a separate contract up there as
well.

The Chairman. Is this a big chunk of business for the company,
the Alyeska and Alaska-related services?

Mr. Wackenhut. Yes, sir, it is.

The Chairman. Do you do work for the constituency companies
of Alyeska? Do you do work for Exxon, British Petroleum, Chevron
and Arco and others?

Mr. Wackenhut. Not to my knowledge, sir. We had a contract
with Exxon years ago at their headquarters building in New York.
I don’t believe we are doing any work for them now at all.

The Chairman. And the other companies?

Mr. Wackenhut. Not to my knowledge.

The Chairman. You have no other contracts with them for refin-
eries or securities anywhere else in the country?

Mr. Wackenhut. We could have, but I am not knowledgeable
about it at this time. I can get that information to you.

The Chairman. Would you provide that for the record, please?

Mr. Wackenhut. Yes, sir.

The Chairman. What is the size of the work you do for Alyeska
in relationship to your revenues? What is this in terms of revenues
to the company, percentagewise?

Mr. Wackenhut. I am not quick enough on my feet to give you a
percentage at this point in time, but I believe it runs $15 or $16
million a year out of a total volume this year of about $560 million.

The Chairman. $560 million is for all of Wackenhut or for do-
mestic operations?

Mr. Wackenhut. No, for the entire corporation.

The Chairman. What would this revenue be out of domestic?

Mr. Wackenhut. I will have to get that for you.

The Chairman. Thank you.

This contract was executed by Alyeska asking Mr. Bernstein
whether or not they could provide these services; is that correct?

Mr. Wackenhut. Yes, sir.

The Chairman. Is Mr. Bernstein an attorney?

Mr. Wackenhut. No, he is not.

The Chairman. Does he have experience in conducting covert ac-
tivities?

Mr. Wackenhut. Well, he is in charge of all our domestic oper-
ations, and I would think I would have to say yes. He was not an
investigator before coming with us.

The Chairman. Who contacted him? Was it Mr. Wellington or
Mr. Hermiller?

Mr. Wackenhut. Yes, Mr. Pat Wellington is the gentleman that
contacted Mr. Bernstein.

The Chairman. He referred him to Mr. Black; is that correct?

Mr. Wackenhut. Yes, sir.

The Chairman. He is head of your

Mr. Wackenhut. Special investigations.

The Chairman. He became the head of your special investigative
unit how?

Mr. Wackenhut. He was brought to my attention — to my atten-
tion by one of our other vice-presidents, stating that Mr. Black had
exhibited an interest to him to join our company because he had
the investigative techniques and he had that experience, and that
he could — we like to call them heavy investigations as opposed to
the investigative group that we had working, which were doing ba-
sically background investigations for preemployment purposes.

So I had been interested in having a man of that capability with
the organization, so we got together and he brought what business
he had with him and he was put on the payroll and we started
from there.

The Chairman. What business did he bring with him?

Mr. Wackenhut. Clients that he had. Attorneys mostly, some in-
surance companies.

The Chairman. When you say heavy investigations, this was con-
sidered a new endeavor for you, for the company?

Mr. Wackenhut. It wasn’t a new endeavor, but we really didn’t
have the personnel aboard at that point in time to do the type of
investigations that Mr. Black was capable of doing.

The Chairman. Were there competing individuals for this posi-
tion?

Mr. Wackenhut. There were other people in our regular investi-
gative division, but in my opinion, I didn’t feel they had the capa-
bilities.

The Chairman. Were there competing people from outside? Did
you look at other firms? You bought Mr. Black’s firm, essentially,
right?

Mr. Wackenhut. We didn’t really buy it, he just joined us. There
was no money exchanged.

The Chairman. There was no money exchanged?

Mr. Wackenhut. No, sir.

The Chairman. Is Mr. Black an attorney to your knowledge, do
you know?

Mr. Wackenhut. No, he is not.

The Chairman. Does he is have a Ph.D., to your knowledge?

Mr. Wackenhut. Not to my knowledge.

The Chairman. Is he licensed to engage in private investigation
work in other States outside of Florida, to your knowledge?

Mr. Wackenhut. To my knowledge, only Florida.

The Chairman. Only Florida. So to your knowledge he is not li-
censed to engage in private investigative work in Virginia or the
District of Columbia?

Mr. Wackenhut. Not to my knowledge, sir.

The Chairman. When Mr. Black came onboard with Alyeska, did
he enter into an employment contract with The Wackenhut Com-
pany?

Mr. Wackenhut. You mean with Mr. Black?

The Chairman. Yes. Did you enter into an employment contract?

Mr. Wackenhut. He went through the ordinary human re-
sources procedures, but I don't have that information. I am not on
top of everybody who gets hired as to what they go through.

The Chairman. I would respectfully suggest this might not be
“everybody who gets hired.” This is a man who is going to run es-
sentially a new division within Wackenhut, one that you highlight
in your annual report and elsewhere as a special service of Wack-
enhut.

Mr. Wackenhut. I am referring to the fact I don’t know what
personnel and human resources procedures he went through. I can
get that for you.

The Chairman. You don’t know the terms and conditions of
Wackenhut bringing Mr. Black onboard?

Mr. Wackenhut. I know what we offered to pay him and he was
going to go to work for us.

The Chairman. You don’t know whether you entered into an em-
ployment contract with him beyond What any person coming on-
board might have, with the right to leave or not leave or what
have you?

Mr. Wackenhut. I am reasonably sure we have no contract with
him. He probably signed a covenant not to compete which is
normal, but I am not sure of that. But we can get that information
for you.

The Chairman. How was Mr. Black given his charter with re-
spect to this investigation? That would be given to him by whom?

Mr. Wackenhut. Actually he reported to Mr. Bernstein, the ex-
ecutive vice-president of domestic operations, but he knew what he
needed to do. The charter was given to him, if you want to call it
that, by Mr. Wellington. He told him exactly what we wanted to
find out, what he wanted to find out, and he went about attempt-
ing to do that.

The Chairman. In your view, was this investigation directed by
Wackenhut Company or was this investigation directed by
Alyeska?

Mr. Wackenhut. By Wackenhut. We kept Alyeska apprised
throughout the entire investigation as to what we were finding or
not finding and so forth.

The Chairman. So is there a supervisor for Mr. Black in this op-
eration?

Mr. Wackenhut. Yes, Mr. Bernstein.

The Chairman. Mr. Bernstein would be in the chain of command
supervising this.

Mr. Wackenhut. Yes, sir.

The Chairman. Thank you.

Mr. Young.

Mr. Young. I have no questions.

The Chairman. Mr. Gejdenson.

Mr. Gejdenson. Did you discuss with Mr. Black and Mr. Lund
the nature of their response to this committee when they were to
be questioned?

Mr. Wackenhut. No, sir, I didn’t, because they had already
hired their own attorneys and from that point on I have not been
in discussion with them at all.

Mr. Gejdenson. Prior to Mr. Black and Mr. Lund did you sit
down and review what happened in this investigation?

Mr. Wackenhut. No, sir.

Mr. Gejdenson. So at no time did you ever go to your — these are
two of your top employees, Mr. Black and Mr. Lund?

Mr. Wackenhut. No, they are not, sir.

Mr. Gejdenson. Where do they fit in the chain of command?

Mr. Wackenhut. Black heads the special investigative division.

Mr. Gejdenson. Black heads what?

Mr. Wackenhut. The special investigative division, which re-
ports to Mr. Bernstein, who reports to my son, Rick Wackenhut,
who is the president and chief operating officer, who in turn re-
ports to me.

Mr. Gejdenson. Mr. Lund, where does he fit in the organization?

Mr. Wackenhut. He is a contract employee who is brought in by
Mr. Black when he needs his services.

Mr. Gejdenson. And did Mr. Black or Mr. Lund go through a
review of the investigation with your son then?

Mr. Wackenhut. Went through it with Mr. Bernstein, went
through it on a number of occasions with the head of security for
Alyeska.

Mr. Gejdenson. At no time did Mr. Black or Mr. Lund directly
review with you what happened in this entire investigation?

Mr. Wackenhut. That is correct.

Mr. Gejdenson. Did Mr. Bernstein review with you what hap-
pened during this investigation?

Mr. Wackenhut. Mr. Bernstein went to my son and the two of
them came to me on one or two occasions when there were some
things happening that they thought deserved my attention.

Mr. Gejdenson. What were those issues they brought to your at-
tention?

Mr. Wackenhut. The first one was when Mr. Hamel had stated
that he was very close to Mr. Miller and the congressman seemed
to be entering into the picture. And I wanted to be sure we were
absolutely straight on that. I asked if they had contacted the attor-
ney, and they said that they had.

And the other time — the other time had to do with alleged by —
alleged by Mr. Hamel the dumping of pollutants into the oceans
and we wanted to be sure, if in fact his allegations were accurate,
whether we had any reporting responsibility to anyone. The attor-
neys advised us we did not.

Mr. Gejdenson. And people like Mr. Black and Mr. Lund, do
they do daily reports of their activities when they are on a case?

Mr. Wackenhut. It is my understanding they do, yes, sir.

Mr. Gejdenson. And so you are telling us, that Mr. Bernstein —
would he review those occasionally or on a daily basis?

Mr. Wackenhut. I don’t think he had the occasion to review
them. He may have done some of that. He is in a better position to
answer that than I am.

Mr. Gejdenson. And your company, as a regular course of busi-
ness, records people’s telephone calls?

Mr. Wackenhut. In regular course of business?

Mr. Gejdenson. In an investigation it would not be irregular for
you to record a telephone call — record people who you are surveill-
ing their telephone calls.

Mr. Wackenhut. It depends on its location. It depends on the
type of investigation. It is an investigative technique.

Mr. Gejdenson. You do do it?

Mr. Wackenhut. It has been done. It was done in this case.

Mr. Gejdenson. Are there guidelines from your company on fol-
lowing the laws of the State and country you are operating in?

Mr. Wackenhut. Yes. All through this case, we were being ad-
vised by an attorney, as you will learn, and we have our own in-
house counsel, and any questions that arise, we do go to them.

Mr. Gejdenson. In taking people’s mail, is there a legal way to
open somebody’s mail? If it's sealed and hasn’t been delivered to
his house?

Mr. Wackenhut. Well, I am not an attorney. I would have to
guess it is not proper to open somebody’s mail, but you are getting
at a question — if you ask me the question, I will try to give you an
answer, sir.

Mr. Gejdenson. OK. Does your company have rules against its
employees opening mail that has been sent through the Federal
mails?

Mr. Wackenhut. The rules of this company are that they do ev-
erything in a legal manner, legal and ethical.

Mr. Gejdenson. So you have some instruction that tells your
people not to open mail because it is illegal?

Mr. Wackenhut. Nothing that specific. It is a broad statement.

Mr. Gejdenson. Are you aware that any of your employees inter-
cepted mail to Mr. Hamel?

Mr. Wackenhut. You ask me, am I aware of that?

Mr. Gejdenson. Yes, sir.

Mr. Wackenhut. Not of that, no, sir.

Mr. Gejdenson. To your knowledge no one in your company
opened Mr. Hamel’s mail?

Mr. Wackenhut. To my knowledge, that is right, sir.

Mr. Gejdenson. Did they ever take documents from his prem-
ises?

Mr. Wackenhut. I understand that they did during the course of
the investigation to show Alyeska the type of documents that were
being stolen from the company.

Mr. Gejdenson. Is it legal to take documents from Mr. Hamel’s
residence?

Mr. Wackenhut. I would certainly think, sir, that you can take
back property that belongs to you. We were the agents for Alyeska
and that property belonged to them. If somebody stole my bicycle,
and I found it in a person’s garage, I’d sure take it back, sir.

Mr. Gejdenson. I can go to your office, and if I decide some of
the things in your office were mine, it is not necessary to call the

police. I can decide these are mine, and without telling you, I can
just take them. Is that your conclusion?

If I walked into your office and saw some letters on your desk, a
pile of letters that I thought were mine, I would have a right with-
out court order, without going to the police, just to pick out the
ones I thought were mine and take them?

Mr. Wackenhut. If they were addressed to you, had the letter-
head with your name on it, I think so, yes.

Mr. Gejdenson. And your investigators are told they have a
legal right to do that by your company?

Mr. Wackenhut. Investigators are not told by our company what
they have a legal right to do until a situation develops and they go
to the attorneys and get the answer.

Mr. Gejdenson. What you do is hire somebody, you make them
an investigator, and you say, we want you to stay within the
framework of the law — go at it?

Mr. Wackenhut. If we were going to do more than that, we
would need something greater than the encyclopedia Brittanica to
get it all in there. You can’t address every instance.

Mr. Gejdenson. For instance, we were told — I think this part is
public because, although the meeting was in secret, the testimony
of the witnesses are public, you would hire a real estate agent, send
that person to Alaska to do work for the company, and you would
give them no guidance. You wouldn’t first sit down with some pro-
gram and say, here is what you can do and here is what you can’t
do?

Mr. Wackenhut. I wouldn’t know what they could do or couldn’t
do until the situation arose, but remember, sir, Mr. Black’s back-
ground was such that he was very well experienced in this type of
activity.

Mr. Gejdenson. Let me ask one last question again. Are any of
your employees licensed in Virginia?

Mr. Wackenhut. We have, I think, four separate licenses in Vir-
ginia with the four offices we have here.

Mr. Gejdenson. And so in the case of taking items from the
home of Mr. Hamel, did you use those licensed agents? Did they
run this operation?

Mr. Wackenhut. They were — it was done by Mr. Black.

Mr. Gejdenson. He was not licensed in Virginia?

Mr. Wackenhut. We thought he was.

Mr. Gejdenson. Is he licensed in Virginia?

Mr. Wackenhut. As far as a specific license, no, we didn’t think
he needed one.

Mr. Gejdenson. So it is your opinion is that this corporation —
what is your gross a year?

Mr. Wackenhut. This year will be between $560 and $570 mil-
lion.

Mr. Gejdenson. So this $ 1/2 billion company sends somebody up
to Virginia to take things from Mr. Hamel’s home, and you
thought it was OK, and that is as far as you felt you had to go.

Mr. Wackenhut. I think that is a rather trite statement, sir.

Mr. Gejdenson. I think your answers are, you know, not really
getting to the issue here.

Mr. Wackenhut. I am getting to the issue. I am chairman of the
board. I am not going down to an investigator and tell him how to
do an investigative case, particularly when he is experienced.

Mr. Gejdenson. It seems to me if it is my billion corporation,
and if I was worried about staying within the law, I would have a
process that made sure that people who weren’t trained, who didn’t
have licenses, weren’t allowed to run loose around the country.

Mr. Wackenhut. He is trained, sir, that is the point. He is excep-
tionally well trained.

Mr. Gejdenson. But not licensed?

Mr. Wackenhut. Specifically by name in Virginia, Mr. Black is
not licensed.

The Chairman. Mr. Lagomarsino.

Mr. Lagomarsino. Thank you Mr. Chairman. I have just one
question. I think you answered this, but just for the record. When
did the name of Congressman Miller first come up in regard to this
investigation?

Mr. Wackenhut. I think in my remarks, sir, I mentioned May 6.
I think that was the date.

Mr. Lagomarsino. When was the contract.

Mr. Wackenhut. May 16, excuse me.

Mr. Lagomarsino. When was the contract with Alyeska entered
into?

Mr. Wackenhut. I believe in March. I don’t have that date, ex-
actly. I can get that for you.

Mr. Lagomarsino. To your knowledge, did Alyeska say anything
about Congressman Miller when the contract was entered into?

Mr. Wackenhut. No, sir, they did not.

Mr. Lagomarsino. Thank you.

The Chairman. Mr. Johnston.

Mr. Johnston. Mr. Wackenhut, let me read from page 7 of your
statement. It says “the methods of undercover surveillance used by
Wackenhut employees in the 1990 investigation are traditional and
standard techniques.”

Of your own personal knowledge, do you know at any time did
Wackenhut, its employees, or its contract employees break any
laws in Alaska, Virginia, Florida or DC?

Mr. Wackenhut. I am told by our attorneys they did not, sir.

Mr. Johnston. The question is, of your own personal knowledge,
do you know of any?

Mr. Wackenhut. Not of my own personal knowledge.

Mr. Johnston. Mr. Lund, you use the term contract employee?

Mr. Wackenhut. Yes, sir.

Mr. Johnston. What does that mean?

Mr. Wackenhut. It means he has his own business where he is
involved in electronic countermeasures and other highly sensitive
electronic type of work. And, he does that on his own and, when
needed, he is hired by Mr. Black to do work for us.

Mr. Johnston. In this operation, Mr. Lund is an independent
contractor, he is not an employee of Wackenhut?

Mr. Wackenhut. Yes, sir.

Mr. Johnston. Do you know of your own personal knowledge if
at any time he violated or broke any laws?

Mr. Wackenhut. To my knowledge, he did not, sir.

Mr. Johnston. You further state on page 5, “Mr. Chairman, con-
trary to media reports, let me categorically state Wackenhut did
not conduct a covert investigation of you, your staff, any member
of your committee or any Member of Congress.”

Do you know for a fact whether any of your independent contrac-
tors may have done that?

Mr. Wackenhut. Of my knowledge, they did not, sir.

Mr. Johnston. They could have though, couldn’t they.

Mr. Wackenhut. I guess they could have. I am sure they did not.
Mr. Johnston. Why are you so sure, Mr. Wackenhut?

Mr. Wackenhut. Why am I so sure? I know what they said. I
know the independent investigation by this law firm we hired has
found nothing that would indicate any irregularities throughout
the entire investigation.

Mr. Johnston. Did they go outside of the corporation to the inde-
pendent contractor?

Mr. Wackenhut. They interviewed him, yes, sir.

Mr. Johnston. Does this — you mentioned to Mr. Gejdenson the
daily reports. Does this committee have every daily report that was
transcribed by your employees?

Mr. Wackenhut. Every one that we can find, sir.

Mr. Johnston. How many are you missing?

Mr. Wackenhut. I am not sure of that exact amount.

Mr. Johnston. About 18 days’ worth?

Mr. Wackenhut. Counsel tells me he thinks it is 18 entries that
seem to be missing.

Mr. Johnston. Do you have any idea why those entries are miss-
ing?

Mr. Wackenhut. No, sir I do not.

Mr. Johnston. Are you continuing to investigate and provide
this committee with them?

Mr. Wackenhut. Yes, sir, we are.

Mr. Johnston. You set up through your organization, Ecolit; is
that correct, sir?

Mr. Wackenhut. Yes, that was set up for this particular investi-
gation.

Mr. Johnston. Did you ever represent to Mr. Hamel or to
anyone that Ecolit had a 501(c)(3) exemption, that it was tax
exempt?

Mr. Wackenhut. This is the first I heard that, sir, I don’t know
anything about that.

Mr. Johnston. You were given a charge by Alyeska to find the
leaks. Did you find any?

Mr. Wackenhut. Yes, sir.

Mr. Johnston. Could you state what they were?

Mr. Wackenhut. Persons in Alaska that were funneling infor-
mation to Mr. Hamel, and that information was turned over to
Alyeska.

Mr. Johnston. Could you inform us of the persons?

Mr. Wackenhut. One name in particular was Robert Scott, who
was an employee of Alyeska.

Mr. Johnston. Any others, sir?

Mr. Wackenhut. I believe there were three or four others. I
don’t have their names in front of me.

Mr. Johnston. Do you know who can produce those names?

Mr. Wackenhut. We have them, we can.

The Chairman. You will provide those for the record?

Mr. Wackenhut. Yes, sir.

Mr. Johnston. That is all, Mr. Chairman.

The Chairman. Thank you.

Mr. Taylor.

Mr. Taylor. Mr. Wackenhut, you mentioned that you did have a
number of people that you found had taken documents or informa-
tion from Alyeska?

Mr. Wackenhut. Yes, sir.

Mr. Taylor. Did any of those documents — and these were stolen.

Mr. Wackenhut. Yes, sir, they were.

Mr. Taylor. Did these stolen documents have anything — deal
with attorney-client privilege, some of them?

Mr. Wackenhut. Some of them did, sir.

Mr. Taylor. Did they deal with perhaps operation or technical
information that might have been of considerable value to competi-
tors or to others?

Mr. Wackenhut. Exactly. And in addition to that, there were en-
gineering drawings that were stolen. It was just a total leak. A
flood of information coming out of the bowels of the company and
they wanted it stopped, naturally.

Mr. Taylor. So various — these were not — the things that were
taken weren’t necessarily pieces of general correspondence between
two people these were trade secrets stolen from a corporation?

Mr. Wackenhut. Exactly.

Mr. Taylor. These were attorney-client privileged documents
that were stolen?

Mr. Wackenhut. Yes, sir.

Mr. Gejdenson. Will the gentleman yield?

These documents that were diverted from Alyeska were trade se-
crets on how they do business and how they make their product?

Mr. Taylor. You are questioning the wrong person.

Mr. Gejdenson. You called them trade secrets. I was under the
understanding these documents dealt with spills of oil and environ-
mental damage that would not be categorized as trade secrets by
anybody.

Mr. Taylor. Well, there your information might be deficit. What
I was trying to do was broaden to find out for myself what was
taken. I understand from Mr. Wackenhut’s statement some of the
information you have been shown was stolen were classified as
trade information or secrets. I think you said engineering drawings
and other drawings.

Mr. Wackenhut. Yes, sir; that is correct.

Mr. Taylor. In other words, we are not just talking about poten-
tial information that might have had to do with oil spills or other
things. We are talking about a company’s assets and in fact its
trade and operational information, its “engineerial” drawing, its
way of doing business is part of its assets.

Mr. Wackenhut. To my knowledge that is exactly correct, sir.
They were privileged documents.

Mr. Taylor. Thank you, Mr. Chairman.

The Chairman. Mr. Richardson.

Mr. Richardson. Thank you, Mr. Chairman.

Mr. Wackenhut, how did the investigation get the telephone
records of Mr. Hamel?

Mr. Wackenhut. What I have been told by the attorneys that
went through the entire process, they were obtained by Mr. Black
through a contact that he had from an advertisement that ap-
peared in a private investigative magazine that circulated through-
out the country where he openly offered for sale toll records of any-
body that you wanted to get them for.

Mr. Richardson. Is that legal?

Mr. Wackenhut. I don’t know. I am told there is nothing illegal
about it.

Mr. Richardson. On page 5 of your statement, relating to the in-
vestigation of Congressman Miller, at the bottom of the page, you
said, “once Hamel mentioned a Member of Congress, Black imme-
diately sought legal advice from a prominent Miami attorney, Wil-
liam Richey.”

Did Mr. Black seek legal advice at his initiative, at your request?
Why did he do that?

Mr. Wackenhut. Mr. Black, as I understand it, did it on his own
initiative for which I am very pleased, and —

Mr. Richardson. Were you informed that the name of Congress-
man Miller was now surfacing?

Mr. Wackenhut. I mentioned previously that my son and Mr.
Bernstein came to me and said that a Congressman’s name had
come up. And I asked if the attorneys had been contacted about
this and they said they had. So, we were going on whatever the at-
torneys said about the situation.

Mr. Richardson. “On May 17, Richey advised Black against pur-
suing any investigation against a Congressman and asked Black to
find out who Congressman Miller is so he could have some context
into which to place Hamel’s claim.”

Now when Mr. Black spoke to Mr. Richey, did Mr. Black say he
was going to investigate Mr. Miller, and Mr. Richey said that this
is not advisable? What was the context of that conversation?

Mr. Wackenhut. I respectfully suggest, sir, that you ask Mr.
Richey that. I was not there at that meeting.

Mr. Richardson. “On the following day, May 18, Black drafted a
memo to Ricki Jacobson, a Wackenhut investigator requesting her
to review various public records to learn about Congressman Miller
and his committee.”

Now, Mr. Wackenhut, isn’t this whole issue concern over what
the Congress might learn on activities by Alyeska? Why would any-
body want to find out anything about Congressman Miller?

The Chairman. I’m just an ordinary guy.

Mr. Richardson. Isn’t it obvious — wasn’t the hearing — wasn’t it
obvious the Congress was already investigating?

The Chairman. You don’t have to say it that way, you know.

Mr. Richardson. Why would it be necessary to find out who Con-
gressman Miller was?

Mr. Wackenhut. Let me give you two answers because you
asked two questions: The first one was, was there any thought or
indication in our minds or Mr. Black’s mind that had anything to
do with oil spills or the Exxon Valdez matter or anything of that

sort. Believe me, that never came up. That was not an issue. That
was not what we were thinking of.

Answer to your second question: Why would anybody question —
make any questions about Congressman Miller.

Mr. Black was engaged in a sting operation in which he was
posing as an environmentalist, and Mr. Miller’s name kept coming
up through Mr. Hamel, not any other way. So it was obvious we
had to find out who Mr. Miller was.

At that point in time, we didn’t know. When I say, “we,” I am
speaking generically, Mr. Black didn’t know certainly, and Mr.
Richey didn’t know. So Mr. Richey wanted to know who Congress-
man Miller was. You can find that out by going to the public li-
brary and that is exactly what we did.

Mr. Richardson. That is my point. Congressman Miller held a
hearing in Alaska a year before this investigation took place. He is
a prominent Member of the Congress. This committee has been
looking at this issue, and my question is: Why would the top inves-
tigator, Mr. Black, not know?

And why would Mr. Richey not know who Congressman Miller is
and why would that prompt a memorandum to Ricki Jacobson re-
questing her to review public records to learn about Congressman
Miller and his committee? You are investigators. Why would you
not know about Congressman Miller and this committee and the
activities of this committee?

Mr. Wackenhut. There was no reason to know, sir. And, we are
investigators, that is what we did. We investigated to find out who
Mr. Miller was from public sources. Certainly nothing wrong with
that. He had to speak about Mr. Miller with Mr. Hamel. He had to
act like he knew who Mr. Miller was.

I venture to say that Mr. Black is not — is not up on all the con-
gressional activities that are taking place. I know that I am not,
and I would be in a better position to be — I am in a better position
to do that than he would be. I was not conscious of — I knew there
were hearings on the Exxon Valdez oil spill and all that sort of
thing, but the names of each individual Congressman are not of
any particular significance to me unless they become significant.

Mr. Richardson. I am going to yield to the gentleman in a
second, but my point is that here you are investigating. You are
asking for public record on something that is painfully obvious. I
don’t understand a $ x /2 billion firm of your sophistication, you’ve
got prominent Washington people. Mr. Richey is a prominent attor-
ney and you have to find out through public sources who Congress-
man Miller is. I am baffled.

Mr. Wackenhut. You are baffled, sir, because it is very close to
you, you have been in the committee. You know all about it. It is
very obvious and it is a close situation to you. It isn’t to us.

Mr. Richardson. All of the documents that you submitted relat-
ing to Congressman Miller, the public records obtained at the Dade
Public Library, is that all the documents that were obtained relat-
ing to Congressman Miller?

Mr. Wackenhut. To my knowledge, except for the client-attor-
ney letter that Mr. Richey wrote concerning this whole matter, and
you have that and he will be testifying, so, again, respectfully, sir, I

would like you to ask him why he didn’t know who Congressman
Miller was.

Mr. Richardson. But in any Wackenhut files, there are no other
papers, documents relating to Congressman Miller.

Mr. Wackenhut. Not to my knowledge.

The Chairman. Mr. Marlenee.

Mr. Marlenee. Mr. Chairman, I reserve the balance of my time.

I apologize to you for all Americans who do not know who Mr.
Miller, the chairman of the committee, is.

The Chairman. It is a great relief to this Member that Mr.
Wackenhut’s firm did not know who I was prior to this investiga-
tion.

Mr. Hefley.

Mr. Hefley. Who is this Miller you keep talking about?

It often is a surprise to us that we are not nearly as important as
we think we are sometimes, Mr. Wackenhut, so I understand that
you wouldn’t know who some of us

Mr. Wackenhut. Believe me, sir, I do not wish to demean any
Member of Congress. I am from Florida, I know who Dante Fascell
is and a couple of other Congressmen down there, but that is about
it.

Mr. Hefley. That’s our beltway mentality here, that we think
people should know. Tell me again, how long has your investigative
firm been in existence? You mentioned that, but I

Mr. Wackenhut. Well, the special investigative group just began
in November 1989. We have been in the investigative business
since I started in 1954.

Mr. Hefley. Prior to this special investigative group, you did
what kind of investigations? You did security, that is a different
branch, but what other kinds of investigation?

Mr. Wackenhut. The investigations we do are primarily back-
ground investigations for preemployment purposes.

Mr. Hefley. Is it unusual, in your history, since 1954, to investi-
gate industrial leaks?

Mr. Wackenhut. We have done so in the past, yes. They are usu-
ally done by placing an undercover agent in the particular compa-
ny, and operating as an employee of that company, to attempt to
find — get familiar with everyone, try to find out where the leak is.

This was a little broader than that, and a good reason for it to
be, actually.

Mr. Hefley. But it wasn’t too unusual for you to look into indus-
trial material being leaked?

Mr. Wackenhut. No, sir.

Mr. Hefley. Tell me again, in what context did this unknown
Congressman Miller’s name arise?

Mr. Wackenhut. Mr. Hamel was bragging about his closeness to
Mr. Miller, bragging about all the information, all the sources and
things he was getting from out of Alyeska, and that he had this
close association, he turned over all the stolen documents to Con-
gressman Miller.

Now, he is saying that; I am not. I don’t know how close he is to
Congressman Miller or how close he was or anything else. All I
know is what he was saying. And he said it on tape, both video and
audio.

Mr. Hefley. So that is how Congressman Miller’s name came up.
Did any other Congressman’s name come up?

Mr. Wackenhut. No, they did not, sir.

Mr. Hefley. There was just Congressman Miller.

Mr. Wackenhut. Since all this broke, there have been three or
four Congressmen, we have learned, that were told that we had
tapped their wires. We haven’t tapped any wires of anybody, let
alone Congressmen.

Mr. Hefley. At any time, was it suggested that we had better in-
vestigate Congressman Miller or we had better tap his wires or
look at his garbage or do whatever you do?

Mr. Wackenhut. Not tap his wires. Should we investigate Con-
gressman Miller, only in the event that it appeared that the allega-
tions by Mr. Hamel had some weight, and that is why the attorney
was contacted. And his response was, no, there is insufficient evi-
dence here; and if the evidence were any greater, we would turn it
over to the Federal authorities. It would not be our province to in-
vestigate Congressmen or any other member of the Government.

Mr. Hefley. Finally, what was your final assessment of Mr.
Hamel and his role in all of this? Was he just a disgruntled person
who had a disagreement with a company, or was there more than
that?

Mr. Wackenhut. I have got my own thoughts, sir, but I don’t
really think I should try to get into Mr. Hamel’s head. He is going
to be interviewed, I understand, by the committee this afternoon,
and I think that would be an appropriate time to ask that question.

Mr. Hefley. Thank you.

Mr. Wackenhut. Thank you, sir.

The Chairman. Mr. Abercrombie.

Mr. Abercrombie. You said you didn’t want to get into Mr.
Hamel’s head. You wanted to get into his house, didn’t you?

Mr. Wackenhut. Mr. Black was invited into his house.

Mr. Abercrombie. Did you have as the object of getting into his
house, to find out more than what was in his head?

Mr. Wackenhut. We wanted to find out what documents he was
receiving and from whom.

Mr. Abercrombie. So Mr. Black had the approbation of your
company; is that correct? Everything Mr. Black did was entirely
within the line of rules and regulations established by you? Yes or
no?

Mr. Wackenhut. As long as it is legal, yes.

Mr. Abercrombie. Did everything Mr. Black did fall within the
rules and regulations of your company? Yes or no?

Mr. Wackenhut. I am not sure I understand what you are
sayipg.

Mr. Abercrombie. Do you take responsibility for what Mr. Black
did within the rules and regulations that he was ostensibly operat-
ing under in The Wackenhut Company?

Mr. Wackenhut. Of course. I am the chairman of the company. I
have to take responsibility. The buck stops here.

Mr. Abercrombie. Did Mr. Black obey all the rules and regula-
tions of The Wackenhut Company and your operation? Yes or no?

Mr. Wackenhut. As far as I know, sir, yes. And that is why we
are continuing on with the internal investigation, not only of our

lawyers but also of our board of directors, to find out if there is
anything that he did that he shouldn’t have done. As of now, we
know of nothing.

Mr. Abercrombie. If it turns out that it does, then you are going
to be held fully liable, civilly or otherwise; is that correct?

Mr. Wackenhut. Obviously.

Mr. Abercrombie. Thank you, Mr. Chairman.

The Chairman. Thank you.

Mr. Wackenhut, you indicated that Mr. Black was invited into
Mr. Hamel’s house. Now, he was invited in obviously as Mr. Wayne
Jenkins, doctor of some science, representing a group called Ecolit.
He was not invited in as Mr. Wayne Black, an employee of Wack-
enhut.

Mr. Wackenhut. Obviously not, sir.

The Chairman. When he was invited into the house, was he in-
vited into the house for the purposes of stealing material from the
house, do you think? Do you think Mr. Hamel asked him in to steal
material?

Mr. Wackenhut. I would think not.

The Chairman. You would think not, and yet Mr. Black did take
material, letters, from Mr. Hamel’s residence.

Mr. Wackenhut. I don’t know about letters, sir. I know about
documents, and we covered that point before.

The Chairman. We have a letter here that is addressed to Gloria
Ewell, which Mr. Black says he took from the residence on May 9,
1990, in his handwriting. [See page 396.] He first says he took it on
April 9, but he wouldn’t be there in April. And then corrects it
with May 9. He says, “received at Charles Hamel residence.” And
the post office box is Alaska. I believe that is Mr. Scott’s.

So this is from Mr. Scott, who had been identified very early on
in this process as a possible suspect.

Mr. Wackenhut. Who is it addressed to, Mr. Miller, please?

The Chairman. It is addressed to Ms. Gloria Ewell.

Mr. Wackenhut. That is a nonexistent person, too.

The Chairman. So you have a right to take mail addressed to
nonexistent persons? Well, this is your employee, Mr. Wackenhut.
For better or for worse.

Mr. Wackenhut. Was it an envelope he took? Was it something
he picked out of the trash? You are asking me questions I can’t
answer, because I don’t know what it is that you are

The Chairman. It was taken out of the house.

Mr. Wackenhut. I don’t know the answer to that. We will find
out for you.

The Chairman. You will find out for me.

Would this be a traditional, standard method of conducting an
investigation, as you said in your testimony?

Mr. Wackenhut. All I can say there is, I would be under the im-
pression that Mr. Black was attempting to show to Alyeska evi-
dence that would indicate who was sending documents and infor-
mation to Mr. Hamel.

The Chairman. What you are suggesting, I think, is that, in the
attempt to determine whether Mr. Hamel is in receipt of stolen
documents, you have the right to steal documents from Mr.
Hamel?

Mr. Wackenhut. We are taking documents that were stolen.

The Chairman. Taking documents from another person’s resi-
dence, which you entered under false pretenses.

Mr. Wackenhut. His residence, his office, out in the street, any-
where. They were stolen, and we retrieved them. They were not his
property.

The Chairman. No, not his office. Not out in the street. You took
from his house, which you entered under false pretenses, letters ad-
dressed to someone else, unopened mail, by the way.

Mr. Wackenhut. I don’t know that. I am told it was not — I was
told it was opened.

The Chairman. Well, we were told by your employees that, in
fact, it wasn’t. We were told by your employees — in the affidavits —
that they were there when this was taken.

Now, in the theft that you condoned, the purpose would be to re-
trieve a stolen document; is that correct?

Mr. Wackenhut. That is what I said earlier.

The Chairman. You would condone the theft to get back Alyes-
ka’s documents; is that correct?

Mr. Wackenhut. I don’t think it is a theft to take property that
doesn’t belong to the person. We are the agents of those it was
taken from.

The Chairman. So you made the decision that that was the
stolen document?

Mr. Wackenhut. I didn’t make the decision, sir. I wasn’t in
there.

The Chairman. Your agent doesn’t know at the time they take
that document whether it is a stolen document.

Mr. Wackenhut. I can’t answer that, because I don’t know

The Chairman. You run a judicial system out at Wackenhut?

Mr. Wackenhut. I told you, I don’t know the answer to that. I
will try to get it for you.

The Chairman. Well, as it turns out, it was a document about
ANWR, about oil imports rising at an alarming rate.

With respect to the telephone tolls, I think that Mr. Richardson
asked about, you said you didn’t know there was anything illegal
about it.

Mr. Wackenhut. That is what the attorneys have told me, sir.

The Chairman. So as far as you know, you can take telephone
tolls from people without their knowledge? You can buy them?

Mr. Wackenhut. That is what we did, sir.

The Chairman. A letter that we have from AT&T says that
“these records related to long-distance charges are confidential and
we will not disclose such records at the request of third parties
unless appropriate legal process is received.” There is no legal way,
no way to get them without the consent of AT&T or the consent of
the parties.

Mr. Wackenhut. Respectfully, Mr. Chairman, if you allow Mr.
Richey to answer these questions for you, he is prepared to do so.

The Chairman. OK, I will be delighted to do it at that point. But
as you state in your testimony, these practices would be traditional
within the workings of your company; is that correct?

Mr. Wackenhut. Yes, sir.

The Chairman. This document that I held up that was sent from
Wackenhut to Alyeska stated that an envelope from P.O. Box 706
zipcode 99686 addressed to Ms. Gloria Ewell in Washington, D.C.,
was recovered by investigator Wayne Black after it was discarded
by Charles Hamel. Discarded within his home, apparently. [See
page 452.]

Yet when Alyeska sent its information to the committee, we
were told only that they have an envelope addressed to Ms. Gloria
Ewell in Washington, D.C.

Was this discarded by Mr. Hamel, or wasn’t it? Because Alyeska
doesn’t tell us it was discarded.

Mr. Wackenhut. I can’t answer that, sir. I don’t know.

The Chairman. So you do not know the status of that envelope?
Is that what you are telling me and you are telling the committee?

Mr. Wackenhut. No, sir, I do not.

The Chairman. When you tell us that you are relying on tradi-
tional and standard methods of operation, how do you make that
determination? How do you determine how your employees carry
this operation out?

Mr. Wackenhut. I don’t make the determination. They are hired
on the basis of their experience and expertise. And they are told
they are to violate absolutely no laws. If there is any question, they
confer with legal counsel. And they operate under his aegis.

The Chairman. What kind of training on the law do you give to
Wackenhut employees, if you will, people who are going to be going
out and following unsuspecting private citizens in this regard?

Mr. Wackenhut. We don’t give any training. Mr. Black would be
in a position to train most of our people. He has had unlimited ex-
perience in this sort of thing.

The Chairman. In response to the subpoena, one of your employ-
ees submitted to us How to Get Anything on Anybody, a book some-
body at NBC News called “possibly the most dangerous book ever
published,” and this was given to your employees to become famil-
iar with investigative techniques. [See page 402.]

And in this rather remarkable book, it says that — according to
the author — “there is no legal way to get an unlisted, unpublished
number. There are a couple of other ways. The phone company
puts out a small book of all unlisted numbers in its areas. A phone
person can sometimes be bribed to sell a copy of this book. If a
number is actually unlisted, a good detective might have sources or
follow the author’s technique.

“In determining and dealing with the records under the control
of a living person, there is no such thing as a closed source. Some
simply necessitate a different plan of attack. Civil servants, City
Hall recordkeepers, et cetera, are often bendable by the correct use
of flattery” — and it goes on to suggest, by flattery, by telling them
you are involving them in an important investigation. And bribes
are sometimes an acceptable alternative.

It also goes on into placing a bug. “Let’s first look at how to get
it in. There are several alternatives and I am going to cover them
in order of descending legality.”

You provide no training to your investigators, and yet this is
what one of your vice presidents of Wackenhut gave to the individ-

uals for the purpose of becoming familiar with investigative tech-
niques.

Mr. Wackenhut. I know nothing about it, sir. I am not familiar
with the book at all.

The Chairman. Well, I appreciate that you don’t know all about
the daily working of your company, but I guess what disturbs me is
that apparently there is not even company policy in place. Or is
there a company policy in place with respect to training people
whom you hire to work under the Wackenhut name, a large, suc-
cessful company, about the parameters of their investigation’s tech-
niques, and the procurement of evidence or information?

If you go to work for many, many large corporations, they like
you to do it their way. I don’t want to use other corporate logos,
but they present to new staff their tradition of doing business,
whether you are in sales or management or legal departments or
what have you. That apparently is not in place at Wackenhut?

Mr. Wackenhut. We have a manual on investigations.

The Chairman. This is not it, I assume.

Mr. Wackenhut. No, sir. I haven’t reviewed it in quite a long
time, so I can’t quote to you what would be in it.

We do have training for all of our people. But as I said, Mr.
Black, for the special investigative group, would be in a better posi-
tion to train than anybody else we have in the company.

The Chairman. But he is not required to train anyone?

Mr. Wackenhut. He would be required to train them up to the
level of what he was going to ask them to do, or else they couldn’t
perform.

The Chairman. In the SID [Special Investigative Division] unit,
Mr. Bernstein is not an attorney, is that correct, as you stated ear-
lier?

Mr. Wackenhut. That’s correct.

The Chairman. Mr. Black is not an attorney?

Mr. Wackenhut. No, sir.

The Chairman. Is there anyone there who advises or trains
people on the legalities?

Mr. Wackenhut. We have two in-house attorneys who get in-
volved in that, yes, sir.

The Chairman. Your corporation is engaged in invading other
people’s lives to one extent or another. It may only be a credit
check, a background check, confidential or not confidential, but
that is a good portion of your domestic operation’s basis, is that
not?

Mr. Wackenhut. No, no, a very small part, sir.

The Chairman. I thought you said in domestic operations you
did a lot of background checks.

Mr. Wackenhut. No, the general investigative division does
background checks. It is a very small part of our business. I think
it is

The Chairman. Do those people get trained on what to do?

Mr. Wackenhut. Yes, sir, they do.

The Chairman. But they would not be the people in the Special
Investigative Division?

Mr. Wackenhut. No. They are all under one division right now.
Black is in charge of them.

The Chairman. Is there a reason you chose not to train people
that do your heavy investigations?

Mr. Wackenhut. I have said now three times that Mr. Black is
extremely experienced in that sort of thing and he was handling
the situation. He was handling that division, and being very suc-
cessful in most of the investigations he conducted, if not all.

The Chairman. Successful, what do you mean by “successful”?

Mr. Wackenhut. Successful by getting the information that the
customer wanted us to get.

The Chairman. That would be the determination?

Mr. Wackenhut. Basically, yes. Or determining that whatever
was alleged about the particular subject was in fact not true.
Either one way or the other.

The Chairman. Without looking behind how that information
was procured?

Mr. Wackenhut. If the edict to them is, you will do everything
according to the law, there is hardly more you can do until you get
into a specific situation. And then you contact attorneys.

I don't know of any book that can spell out everything that need
be done in any particular type of investigation. They are as varied
as the stars in the sky.

The Chairman. Yes, they are, there is no question about that.
But there is also a question about whether the techniques are
within or outside the law, as well as the procedures that are re-
quired for an investigator to comply with the various State laws.

If you were going to bug somebody’s phone conversation, tape
somebody’s phone conversation in the State of Florida, there are
legal requirements, are there not?

Mr. Wackenhut. It is my understanding, again, Mr. Richey can
answer all these questions for you so much better than I can

The Chairman. Are you the largest security firm in this coun-
try?

Mr. Wackenhut. No, sir.

The Chairman. No. What are you?

Mr. Wackenhut. Third.

The Chairman. Third. But you are a national, international
firm.

Mr. Wackenhut. Yes, sir.

The Chairman. Would you not guess, Mr. Wackenhut, whether
or not there are legal requirements in the State of Florida?

Mr. Wackenhut. There are legal requirements. Mr. Black is
very familiar with them, as are our attorneys.

The Chairman. Would you guess that there are Federal regula-
tions and laws with respect to extracting communications between
two people?

Mr. Wackenhut. There are, of course.

The Chairman. And yet you do not engage in a policy of taking
your people through the process of what would be expected. You
expect all of your people to know the law. Essentially, that would
be the case, because you do tell them they can only do that which
is legal?

Mr. Wackenhut. I am repeating myself, Mr. Miller. I have said
three times now they contact an attorney when they have any
questions.

The Chairman. So they all contact the attorney prior to any ac-
tions that they take?

Mr. Wackenhut. Generally, yes.

The Chairman. Generally. That is what worries me, Mr. Wack-
enhut.

Mr. Wackenhut. I can’t tell you every instance that has taken
place, but I am assured that that is what happens, and it happened
in this case.

The Chairman. Mr. Young.

Mr. Gejdenson.

Mr. Gejdenson. Thank you.

You know, my problem here is — forget the employees you have
walk in the door — I don’t get a solid sense that you as the head of
the company have an understanding of what is legal or not legal.
We have spent a lot of time here worrying about the police break-
ing and entering without due process, but the indication I get is
that your firm feels that it doesn’t have basic law that it has to
follow.

Mr. Wackenhut. Negative.

Mr. Gejdenson. Negative. Let me ask you this. So it is your feel-
ing that you have a right to take documents from someone’s home?

Mr. Wackenhut. We have covered that point, sir.

Mr. Gejdenson. But that is your feeling, you can go into my
house, take an envelope, and walk out with it, and you can do that
legally without getting a court order, because you, Mr. Wackenhut,
decided it was stolen? You may not know what is in it, but once
you decide, and I am not sure where you get this authority and
power in the constitutional laws of the country, but you can come
into my house and if you see something, that pen looks like it is
mine, I will just take that with me. That is what you can do, and
that is legal?

You can buy phone records. Is the gentleman sitting next to you
a lawyer?

Mr. Wackenhut. Yes, sir.

Mr. Gejdenson. Did he tell you you could buy phone records?
Can you do that legally?

Mr. Baldwin. The purchase of phone records? Yes, sir, of course
you can purchase a phone record. If someone is willing to sell the
record, yes, sir.

Mr. Gejdenson. So if I have something that is stolen, you are
going to advise your client that he can buy that legally? There ap-
pears to be no legal way to get from the phone company my phone
records, and — where are you a lawyer, in this town?

Mr. Baldwin. In Miami, sir.

Mr. Gejdenson. So in Miami you are going to advise your client,
if I am standing on the street comer with 150 Rolexes under my
coat, he can legally buy them?

Mr. Baldwin. No, sir, but that is

Mr. Gejdenson. Why do you think you can advise him that
somebody can steal my phone records, and as long as we keep a
reasonable legal distance, can he buy them?

The Chairman. One second, if I might. First of all, the attorney
is not the witness here, but Members do have a right to ask the

attorney a question. If you ask the attorney a question, let the at-
torney answer the question.

Mr. Baldwin. I am sorry, Congressman, I don’t understand your
question.

Mr. Gejdenson. If I have something that’s stolen — there’s no
legal way to get it — I have got an F-16, it is Government property,
you can’t buy it, and I come up to you and say, I have this F-16, it
is in my possession. Can you legally buy it if you know it’s stolen?

Mr. Baldwin. Not if I know it is stolen, no.

Mr. Gejdenson. Do you know of a legal way to get phone
records?

Mr. Baldwin. If the phone company will sell them

Mr. Gejdenson. The phone company won’t.

Mr. Baldwin. The sale of a record is not the only way the phone
company might let records out, sir. I am not the phone company
and I have never represented one, and I can’t answer factually.

Mr. Gejdenson. You would be ready to tell your client it is legal
to buy something that nobody, to my mind, has presented a legal
way of obtaining, buying some spy magazine list? You would say
that is fine to your client?

Mr. Baldwin. I am sorry, sir. I can’t address a hypothetical like
that. I would have to look at the situation.

Mr. Gejdenson. Would you advise your client that it is all right
to take mail from my house once he decides it is not mine, without
a court order?

Mr. Baldwin. If an individual is representing someone who
owned the property and the property clearly belongs to that indi-
vidual, yes, sir.

Mr. Gejdenson. So you can come in to my house, and once one of
his highly trained individuals identifies something as not being
mine, he has a right to take it without going to court, without call-
ing the police or anything else?

Mr. Baldwin. Yes, sir.

Mr. Gejdenson. But on the other hand — let me ask one more
question. Let me go back to Mr. Wackenhut.

You say you didn’t tap any of these phone lines. Did you record
any of these conversations through some other means?

Mr. Wackenhut. It is my understanding that they did, yes.

Mr. Gejdenson. Did any of those recordings include a conversa-
tion held with a Member of the United States Congress?

Mr. Wackenhut. No, sir.

Mr. Gejdenson. Were any recorded in Florida?

Mr. Wackenhut. I understand one was. I was told that just this
past week.

Mr. Gejdenson. Were any recorded in Virginia?

Mr. Wackenhut. I believe there were a number recorded in Vir-
ginia.

Mr. Gejdenson. It is your opinion that it is illegal for a staff
person of a company to take home a document which he has right-
ful access to?

Mr. Wackenhut. I guess I don’t know what you mean by “right-
ful access.”

Mr. Gejdenson. If I work in a company and these are documents
I work with every day, is it illegal for me to take them home?

Mr. Wackenhut. Not if you bring them back.

Mr. Gejdenson. Is it illegal for me to bring a Xerox of them
home?

Mr. Wackenhut. I don’t think without authority you have that
right, no.

Mr. Gejdenson. Is it prohibited in Alyeska for employees of the
company to take documents home with them?

Mr. Wackenhut. Mr. Congressman, the Alyeska people will tes-
tify.

Mr. Gejdenson. Let me ask you a question about Rick Lund. In
your report, the document we have here, it says, he teaches special
courses to U.S. Government Agents on methods of entry, wiretap-
ping, and countermeasures. Is that correct?

Mr. Wackenhut. Does it say wiretapping?

Mr. Gejdenson. It says wiretapping, that he teaches special
courses to U.S. Government Agents on methods of entry, wiretap-
ping, and countermeasures.

Mr. Wackenhut. Yes, the U.S. Government can wiretap legally.

Mr. Gejdenson. Mr. Lund teaches Government Agents; is that
correct?

Mr. Wackenhut. That is what I am told, yes, sir.

Mr. Gejdenson. What portion of your business is with the U.S.
Government?

Mr. Wackenhut. A significant portion.

Mr. Gejdenson. Which Agencies do you work for?

Mr. Wackenhut. Department of Energy, Department of the
Army, Department of State.

Mr. Gejdenson. Those are the only Federal Agencies you work
for?

Mr. Wackenhut. Department of Labor.

The Chairman. You are free to submit that for the record.

The Chairman. Mr. Lagomarsino.

Mr. Marlenee. Will the gentlemen yield?

The Chairman. Mr. Marlenee.

Mr. Marlenee. There occurs the question of legality, and a ques-
tion that I have, it seems that the documents in question that we
are making so much about were stolen starting in May 1990 from
Mr. Hamel’s home, a full 18 months from now, 18 months ago.
Eighteen months ago is a sufficient amount of time for any individ-
ual to ascertain that the documents that were once in his posses-
sion are no longer in his possession, and if in fact it was illegal, has
Mr. Hamel filed a complaint with the jurisdiction of law, appropri-
ate jurisdiction of law to your knowledge?

Mr. Wackenhut. Not to my knowledge, sir.

Mr. Marlenee. So there has been no complaint filed with the ju-
risdiction of law that in fact these documents were stolen. And one
more question, if the gentleman would yield further.

Mr. Lagomarsino. Yes, I yield.

Mr. Marlenee. Mr. Wackenhut, has your company or you in
management ever circulated a memo, a directive stating that your
employees will follow the laws of the State of Florida or this
Nation?

Mr. Wackenhut. Yes, sir. Each year, and that is one of the
papers we put into the record, it is a statement of integrity that
every employee has to sign on an annual basis. [See page 389.]

Mr. Marlenee. That they will follow the law?

Mr. Wackenhut. Yes, sir.

Mr. Marlenee. Thank you for yielding.

The Chairman. Let us not suggest that Mr. Hamel knew on May
5 or May 6 that these documents had been stolen from his house.
This was a covert operation of which Mr. Hamel was not then
aware.

Mr. Marlenee. Is he aware at this time?

The Chairman. I assume he is.

Mr. Marlenee. Why doesn’t he file a charge then?

The Chairman. Mr. Marlenee is insinuating that Mr. Hamel sat
on his rights for the last 18 months. That is not the case.

Mr. Marlenee. I thank the gentleman for yielding.

The Chairman. Mr. Johnston.

Mr. Johnston. Mr. Wackenhut, I think it is previously testified
and conceded that your company went through the garbage and
trash of Mr. Hamel.

Mr. Wackenhut. That is my understanding, yes.

Mr. Johnston. Mr. Hamel, in litigation with Exxon, Alyeska,
didn’t you retrieve from the garbage privileged communications be-
tween his attorney and him that you turned over to Alyeska?

Mr. Wackenhut. I can’t answer that, sir, but I am sure the
people from Alyeska can. I don’t know what he found and what he
turned over. He was simply looking for the name of the individual
that was leaking the information.

Mr. Johnston. But you concede that everything that was re-
trieved from the garbage was turned over to Alyeska?

Mr. Wackenhut. I believe so.

Mr. Johnston. I refer you to Mr. Lund’s notes on page 2 in
which he states that he received communications from an Elliott
Stepovitch, who was the attorney for Mr. Hamel, regarding litiga-
tion between Hamel and Alyeska. [See page 426.] Are you knowl-
edgeable of that, Mr. Wackenhut?

Mr. Wackenhut. Repeat the question, sir.

Mr. Johnston. From Mr. Lund’s own personal notes of informa-
tion he extracted from the garbage, that he found communications
between this law firm who are Trustees for Alaska, an environ-
mental group, dealing with possible litigation between that organi-
zation and Alyeska or Exxon. [See page 437.]

Mr. Wackenhut. You are asking me, am I aware of this?

Mr. Johnston. Yes.

Mr. Wackenhut. No, sir. But I understand if it is thrown away,
it is in the trash. Any privilege then is eliminated.

Mr. Johnston. Then I invite you to look at Mr. Lund’s notes as
to information that he received and passed on to Alyeska and did
not destroy.

Let me shift again back to telephone communications. What is
the standard operating procedure of Wackenhut to obtain tele-
phone information, lists of telephone calls?

Mr. Wackenhut. We don’t get involved in that to any great
extent. And I don’t know that we have a policy on that at all. As I

said before, we get legal advice before we do anything there’s a
question about.

Mr. Johnston. But over the years of investigation, you don’t
have a standard procedure, if you want to get a list of telephone
calls, on going out and getting them?

Mr. Wackenhut. No, sir.

Mr. Johnston. Do you always insulate yourself from any crimi-
nal or civil liability by hiring independent contractors to go out
and provide with you these lists?

Mr. Wackenhut. Hiring an independent contractor wouldn’t ac-
complish that. It just so happens that he is an independent contrac-
tor.

Mr. Johnston. Sir, do you know what a pen register is?

Mr. Wackenhut. I found out what a pen register was just last
week, and we did not use one.

Mr. Johnston. Would you explain to the committee what a pen
register is?

Mr. Wackenhut. As I understand it, it is something that you
attach to a telephone to pick up conversations between individuals.
Oh, I know — OK. It records the telephone numbers.

Mr. Johnston. It records the specific number

Mr. Wackenhut. Of the person calling, yes.

Mr. Johnston. Does it also record the length of time?

Mr. Wackenhut. I don’t know, sir. I am not familiar with it.

Mr. Johnston. If a register was on a local phone here, that regis-
ter would pick up every number that was dialed out of that phone?

Mr. Wackenhut. Yes, sir.

Mr. Johnston. Do you know David Ramirez?

Mr. Wackenhut. Yes, sir.

Mr. Johnston. Would you explain to the committee who David
Ramirez is?

Mr. Wackenhut. David Ramirez is a former Army — I think he
was an officer. He has been working for us for a period of maybe 6
or 8 months, maybe longer, in an undercover capacity at one of our
clients in Miami.

Mr. Johnston. Is Mr. Ramirez presently an employee of Wacken-
hut?

Mr. Wackenhut. As far as I know, sir.

Mr. Johnston. Have you had the opportunity to see Mr. Rami-
rez’s testimony of November 3? His affidavit? [See page 438.]

Mr. Wackenhut. No, sir.

Mr. Taylor. Mr. Chairman, I am getting hernia of the eyes get-
ting tons of things coming in here not marked. Can we have some-
thing to tell us what part of the witness’s testimony these things
coming before us have to do with?

The Chairman. I think in this particular instance, I believe iden-
tified as Mr. Rick Lund’s steno book, which the committee has had
for many, many weeks now.

Mr. Taylor. I just saw it today.

The Chairman. Well, that’s not my concern. And when Mr.
Johnston asked the question, he referred to it. He has now, I be-
lieve, just referred to testimony of David Ramirez, which we re-
ceived this morning, and made a copy available to the Minority,
which he is now asking Mr. Wackenhut about.

Mr. Johnston. I got these 10 minutes ago, too, so don’t feel
slighted.

Mr. Taylor. Could you point to the page you are talking about?

Mr. Johnston. Mr. Wackenhut, page 2 of Mr. Ramirez’s testimo-
ny, second paragraph. This is Mr. Ramirez under sworn testimony.
“Rick Lund,” who is an independent contractor of yours, is that
correct, Mr. Wackenhut?

Mr. Wackenhut. Rick Lund is, yes.

Mr. Johnston. “Rick Lund told me he purchased his electronic
surveillance equipment through export companies. I have seen in
Rick Lund’s possession at least four telephone ’pen registers’ in use
and, in one case, I was involved in maintaining them. Pen registers
are illegal for use in this country.” Parenthetically, Mr. Wacken-
hut, is that statement correct?

Mr. Wackenhut. I don’t know, sir.

Mr. Johnston. You don’t know if pen registers are illegal?

Mr. Wackenhut. No, I do not.

Mr. Johnston. “When in use the pen register can audit tele-
phone numbers dialed from and to a specific number, which also
included the time, date, and length of the conversation of each call.
The calls were printed on a register tape.”

Do you know of your own knowledge if Rick Lund as your inde-
pendent contractor ever used a pen register in the investigation of
Mr. Hamel or on behalf of the Alyeska Corporation, your client?

Mr. Wackenhut. Of my own knowledge, I do not, but I was told
by attorneys that he did not.

Mr. Johnston. He did not?

Mr. Wackenhut. That is what I was told.

Mr. Johnston. Which attorneys?

Mr. Wackenhut. The attorneys from Holland and Knight that
have been going through all the information.

Mr. Johnston. But you have no reason to doubt Mr. Ramirez’s
testimony where he states, in the past Mr. Lund has used these
pen registers? I am not saying he has used them in your operation,
but he had access to them and has used them.

Mr. Wackenhut. I don’t know.

Mr. Young. Mr. Chairman, if the gentleman will yield, Mr. Ra-
mirez’s letter just came before this committee, just came before the
chairman. We don’t know who in the hell he is.

The Chairman. Mr. Wackenhut just established who he was.

Mr. Young. Fine, but we don’t know. If we are going to start re-
ceiving so-called documents from people we haven’t checked out
their backgrounds, we don’t know exactly whether they are merito-
rious, whether he has just been fired or is presently employed or
what.

Now, I don’t object to your question, but I am saying, I just got a
memo here from Alice in Wonderland, too.

Mr. DeFazio. Throw it over the transom.

Mr. Johnston. May I recapture my time here?

The Chairman. The time belongs to the gentleman from Florida.
Not much of it, by the way.

Mr. Johnston. Very quickly, Mr. Young, I qualified him before I
asked any questions. Mr. Ramirez is a present employee of Wack-
enhut.

And one last question, Mr. Wackenhut, do you have his testimo-
ny before you?

Mr. Wackenhut. I do now, yes, sir.

Mr. Johnston. So you are reading off of identically the same doc-
ument I am reading off of, aren’t you?

Mr. Wackenhut. Yes.

Mr. Johnston. No further questions.

The Chairman. Mr. Taylor.

Mr. Taylor. I will pass this time, Mr. Chairman.

The Chairman. Mr. Richardson.

Mr. Richardson. Thank you, Mr. Chairman.

Mr. Wackenhut, since you were dismissive about the Miller in-
vestigation, let me refer to you, and my colleagues, I am going to
be referring to document No. 18, which I believe everyone has,
memorandum from Mr. Black to Mr. Wellington, which contains a
legal opinion from the Richey firm. Mr. Wackenhut, do you have
that? [See pages 443-444.]

Mr. Wackenhut. Yes, I do now.

Mr. Richardson. According to the May 22 legal memo done by
the Richey firm, both Alyeska and Wackenhut seriously considered
extending the covert operation directly to a Member of Congress.
[See page 453.] Who was this Member of Congress?

Mr. Wackenhut. If it ever happened, it would have been Mr.
Miller. He is the only name that ever came up as a Member of
Congress in this entire investigation.

Mr. Richardson. Let me just read you — and I hope my col-
leagues will bear with me — a couple of quotations I want to make
from the letter of the Richey firm. The first paragraph of the
Richey firm letter: “In particular, we have been advised that
Alyeska is considering an investigation which may use covert oper-
atives who may assume different identities when dealing with a
Congressman.”

Second paragraph: “Although Alyeska is more than justified in
wanting to vigorously investigate these allegations, there are sever-
al significant, difficult issues underlying the proposed plan.”

Now I am going to go to page 5 of that same legal opinion. “Your
ability to legally record and intercept conversations with a Con-
gressman will depend on the location of the conversation. It is our
understanding that conversations with a Congressman might take
place in Washington, DC., Virginia and Maryland. Recording con-
versations with one party’s consent is legal in the District of Co-
lumbia and Virginia. It is illegal in Maryland.”

I will turn now to page 6, the third paragraph. “Assuming that
the Congressman is encouraging or requesting that documents be
stolen from Alyeska, then you might be able to use this informa-
tion to successfully argue that the evidence should be suppressed in
any congressional hearing (or any other type of legislative or judi-
cial proceeding, for that matter).”

Next paragraph: “Assuming that the Congressman is involved in
more than moral and ethical improprieties, a successful investiga-
tion might lead to a criminal indictment against the Congressman
and others who knowingly participated in the theft of privileged,
confidential documents from Alyeska.”

Bear with me. This is the last item I am going to quote. Page 9,
last paragraph: “The public’s perception of the Congressman's ac-
tivities will also influence your ability to obtain benefits from a
successful operation. The information in the documents will affect
the perception: the more damaging the information, the less likely
that Congress and the public will be offended by the theft of the
document.”

Last page, third paragraph: “In light of the risks, we believe that
additional research and analysis is necessary before you make a
commitment to approve the use of covert operatives against a Con-
gressman or before you refer the matter to the FBI.”

Now, you said you didn’t investigate any Member of Congress,
but the legal opinion, from what I read, in this document does not
say: stop, don’t do it at all. It basically says: balance the risks and
interests. Mr. Wackenhut, is that an accurate characterization of
this memorandum?

Mr. Wackenhut. Again, Mr. Richey is going to testify before
you. I would ask him, because it is his memorandum. And it is my
understanding that his advice was, cease and desist as far as the
Congressman is concerned.

You must remember, we had nothing specific. We had Mr.
Hamel babbling away at his relationship with Mr. Miller.

The Chairman. Will the gentleman yield?

Mr. Wackenhut. It came up again and again and again.

Mr. Richardson. I yield.

The Chairman. Could you tell us where that advice from Mr.
Richey is, to cease and desist?

Mr. Wackenhut. I don’t know if it is in here, but he told us to
cease and desist. That is my understanding. Again, ask him, please.

The Chairman. When did he tell you?

Mr. Wackenhut. He didn’t tell me personally, sir.

The Chairman. When did he tell The Wackenhut Company?

Mr. Wackenhut. Shortly — right around May 10 or 17, in that
area, after Black had gone to him and told him that he had picked
up all this information from Mr. Hamel.

The Chairman. And he told Mr. Black what?

Mr. Wackenhut. He told him that he shouldn’t do it, shouldn’t
get involved in investigating a Congressman.

Mr. Richardson. Mr. Chairman, let me just state for the record,
the memorandum from the Richey firm does not reflect that opin-
ion. And I urge you, Mr. Wackenhut, to read it.

I will ask that question. Let me now refer to Mr. Black’s memo-
randum to Mr. J. P. Wellington. “Conclusion.” [See page 447.] I am
referring to page 4 of that memorandum. “We feel Hamil is truth-
ful with our undercover investigators when he repeats his purpose
for release of documents to the media, the Alaska attorney gener-
al’s office, the Department of Justice, and even our research
groups. Hamel has never indicated that he is interested solely in
providing information to a congressional committee to assist in any
investigation. Likewise, we do not know if Congressman Miller or
any Member of his committee has requested Hamel or his sources
to steal or otherwise obtain stolen documents from Alyeska. We
are concerned that Hamel may be using his alleged relationship
with Miller to extort or blackmail Alyeska or Exxon.

In "Conclusion,” the last page, “we have carefully reviewed the
legal discussion found in section 14 of this report dealing with the
likelihood of unofficial involvement on the part of Congressman
George Miller. While the cursory legal opinion was necessary, we
feel no action need be taken at this time. Surely, future contact
with Hamel will result in additional, more clarifying information
about Congressman Miller.”

Does that suggest that that cease and desist about Congressman
Miller was happening?

Mr. Wackenhut. The last sentence, Congressman, says, “if and
when Hamel even hints that he (Hamel) is assisting or acting as an
agent of Miller, we will cease our undercover approach.”

Mr. Richardson. Let me then ask you, Mr. Wackenhut, did
Wayne Black ever solicit in any way information about Mr. Hamel
from Mr. Hamel about Congressman Miller?

Mr. Wackenhut. No, sir, he did not. It was all voluntary by
Hamel. Hamel mentioned Congressman Miller over and over and
over again.

Mr. Richardson. Mr. Chairman, my last —

The Chairman. Mr. Wackenhut, in light of your answer, have
you seen the tapes?

Mr. Wackenhut. No, I haven't seen those, sir.

The Chairman. OK.

Mr. Richardson. Mr. Chairman, I am going to just — what is dis-
turbing to me, Mr. Wackenhut, is the first page of the legal memo-
randum, and I will ask Mr. Richey, “In particular we have been
advised that Alyeska is considering an investigation which may use
covert operatives who may assume different identities when deal-
ing with a Congressman.” [See page 464.]

Now, to your knowledge, was such a plan ever discussed with
Wackenhut? Or was this just an Alyeska initiative? Because you
were employed by — the day of this memorandum was May 22,
1990? What is Alyeska — what is Mr. Richey referring to?

Mr. Wackenhut. I don’t know, sir. Ask Mr. Richey, if you please.
I respectfully ask that. And number two

Mr. Richardson. You knew nothing about this?

Mr. Wackenhut. No, sir. I heard after the fact that there had
been a meeting with Alyeska and their attorneys concerning the
allegations against Mr. Miller by Mr. Hamel, and that it was
thought of and suggested and discussed at that time that perhaps
all of this information should be turned over to a Government
Agency, and the decision was not to do so. And I can’t tell you why.

Mr. Richardson. I want to read a memorandum from — to the
file by Mr. Wayne Black, May 18, 1990. [See page 443.] “I reminded
all present that the focus of the investigation was the person(s)
stealing documents from Alyeska, and not necessarily Hamel or
Congressman Miller. I mentioned that it was our belief at this time
that Hamel was using Miller’s influence to enhance his position
with Exxon. That is, he may possibly be extorting Exxon by using
Miller and Miller’s committee as a threat.” Finally, “[a]s our inves-
tigation progresses, hopefully we will have an opportunity to either
disprove or prove Hamel’s allegation that Miller is aware that
Hamel’s sources are stealing proprietary information from
Alyeska.”

Mr. Taylor. A parliamentary inquiry

Mr. Wackenhut. Prove or disprove?

Mr. Richardson. Did they try to prove it?

Mr. Wackenhut. No, sir.

Mr. Richardson. What is this document? They didn’t try to
prove it nor did they try to disprove it?

Mr. Taylor. A parliamentary inquiry, Mr. Chairman.

Mr. Wackenhut. It says, prove or disprove Mr. Hamel’s allega-
tion that Mr. “Miller is aware that Hamel’s sources are stealing
proprietary information from Alyeska.”

Mr. Richardson. Did Mr. Black

Mr. Marlenee. We cannot hear the witness. I would like to have
the question and the answered repeated.

The Chairman. Restate the question, if you can, please.

Mr. Richardson. On the items that I read in that memo to the
file, did they try to prove it or disprove it? And my second question
is, did Black initiate questions on Congressman Miller’s staff?

Mr. Wackenhut. Excuse me, sir, say that again.

Mr. Richardson. Or Congressman Miller. You want me to
repeat

Mr. Wackenhut. Please.

Mr. Richardson. You have this document?

Mr. Wackenhut. Yes. I have trouble listening and reading at the
same time.

Mr. Richardson. I will let you read it. Go ahead.

Mr. Taylor. May my parliamentary inquiry, which takes prece-
dence over debate, be addressed?

We have gotten a number of pieces put before us. Are these
being introduced for the record or just the parts being read intro-
duced into the record?

The Chairman. The documents as used by Members are put into
the record under the agreement reached between the Majority and
the Minority.

Mr. Taylor. The full document?

The Chairman. Yes, the full document.

Mr. Taylor. Thank you, Mr. Chairman.

Mr. Wackenhut. Your question now, sir?

Mr. Richardson. The question is, did they try to prove or dis-
prove what is contained in this memo to the file?

Mr. Wackenhut. Well, they continued on with the undercover
operation with Mr. Hamel, hoping that he would give sufficient in-
formation that we could disprove that Mr. Miller was not involved.
We did not think that he was.

And we think, and certainly Mr. Black thought, that Congress-
man Miller and not even necessarily Hamel were the targets of the
investigation. The targets of the investigation were who were steal-
ing the documents. And by establishing a close relationship with
Mr. Hamel, who is receiving the documents, they were atempting
to find out who it was.

It is that simple. And the name of the Congressman continued to
come up.

Mr. Richardson. Did Black initiate questions on Congressman
Miller or his staff?

Mr. Wackenhut. I am not aware of anything in that regard.

Mr. Richardson. I don’t understand. We are talking about the
investigation starting in March, and now we are talking about a
May 18 memo to the files, so there is still confusion about Miller
being investigated or not.

Mr. Wackenhut. Mr. Miller’s name first came up on May 16.
Legal advice was sought. And the outcome of the legal advice, and
that will be answered specifically for you by Mr. Richey, was that
we not do anything regarding Mr. Miller. That was it.

Mr. Richardson. Directly or indirectly? Covert or overt?

Mr. Wackenhut. Either way. No investigation of a Congressman.
And Mr. Miller is the only name of any Congressman that surfaced
during this investigation.

The Chairman. If the gentleman will yield so we can clarify. In a
previous memo you read, it said, “We will cease our undercover ac-
tivities.” You are saying it was, in fact, broader than that?

Mr. Wackenhut. No, I am not intimating that it was broader
than that.

The Chairman. No, no. I mean, this was cease and desist across
the board?

Mr. Wackenhut. Yes, sir.

The Chairman. The memo says that if what in the memo turned
out to be the case, they would cease all their undercover activities.
Does that mean they would cease all activities?

Mr. Wackenhut. Yes, sir.

The Chairman. That’s your interpretation.

Mr. Wackenhut. Yes, sir, because that is what the investigation
was, an undercover investigation.

The Chairman. Mr. Marlenee.

Mr. Marlenee. I reserve my time, Mr. Chairman.

The Chairman. Mr. DeFazio.

Mr. DeFazio. Thank you, Mr. Chairman.

Mr. Chairman, if I could, since some questions were previously
directed to the attorney, I would like to direct some questions to
the attorney. Is that permissible?

The Chairman. Yes.

Mr. DeFazio. I apologize for being late, but I was involved in an-
other hearing.

You are an attorney. Are you of counsel in this matter, on gener-
al matters, on retainer, on staff? What is your relationship to the
company of Mr. Wackenhut?

Mr. Baldwin. We have been retained in order to assist The
Wackenhut Company in its internal review and investigation of
this particular matter.

Mr. DeFazio. OK, then you may not be qualified for this. But
there was significant discussion of the phone company tolls, the re-
ceipt of stolen documents from Mr. Gejdenson, including records of
toll calls, and I guess my question would be, how would you deter-
mine whether or not such documents might or might not be legally
obtained?

Mr. Baldwin. I really can’t answer your question, Congressman,
not having done it. I mean, you are asking — I just don’t have an
investigative plan that detailed.

Mr. DeFazio. So we will deal with Mr. Richey on that.

To Mr. Wackenhut

Mr. Baldwin. Sir, are you asking me the legality of the posses-
sion of the toll record?

Mr. DeFazio. That’s correct.

Mr. Baldwin. All right. It is my understanding, preliminarily, it
is my understanding that there is no Federal law that prohibits the
sale or disclosure of telephone toll records, with one exception.
There is a Federal statute that prohibits disclosure of those records
to the U.S. Government, but expressly permits disclosure to anyone
else.

Mr. DeFazio. But that is Federal law, but there would also be
State law, and since we are dealing with, in the case of Alyeska,
company policy or whether or not to determine whether something
was privileged information and/or stolen, therefore whether or not
it was legally restolen or stolen again from someone’s house, it
seems to me that you would need to go to a couple of other levels
here, with the State law in the applicable State where the docu-
ments were obtained, and finally down to the level of what is the
policy of that company, and whether or not the documents were le-
gally obtained from that company itself.

Mr. Baldwin. In regard to the documents, yes, sir, but in regard
to the toll records in particular, which is what I was addressing,
there is no law in the States of Alaska or Virginia that I am aware
of that I have found yet in my research. That is not to say there is
no such law, but I haven’t found one yet that prohibits the disclo-
sure of a telephone toll record.

Mr. DeFazio. Then in the case of documents at the Alyeska Com-
pany, which were perhaps stolen and sent to Mr. Hamel or others,
and then were stolen by your operatives — excuse me, not your
operatives, but the operatives of The Wackenhut Company, I guess
the same conditions would apply, there is probably no law in
Alaska about stealing it, taking a document from the Alyeska Com-
pany, just like there is no law in Alaska about phone company
records. It is a company policy, it is proprietary information. There
are no laws that cover proprietary information, company policies,
phone company policies, Alyeska’s policies, incorporated in the
State of Alaska or

Mr. Baldwin. I am not in a position to answer your question in
regard to Alyeska’s policies at this point, and I am not in a posi-
tion, unfortunately, to answer your questions regarding the law of
Alaska.

Mr. DeFazio. OK, but as a general rule of law, something is la-
beled proprietary, and you know, the possessor of that document
has not authorized its release. What, release of that document
would violate a rule of law, or just sort of an internal ethical prob-
lem?

Mr. Baldwin. Again, it would depend upon the State laws and
the company policies.

Mr. DeFazio. OK. So we are pursuing an investigation where
documents are stolen from someone’s home in Virginia that pur-
portedly are proprietary documents from the State of Alaska. You
are stating it is legal to steal or resteal these documents because
they were theoretically stolen documents, but you are not aware of
the laws of Alaska on the proprietary nature; whether or not the
laws of Alaska were violated in the removal of those documents.

Mr. Baldwin. We do know Alyeska said their documents were
taken and removed without their authorization. To that extent we
know the policy of Alyeska was not to be giving out documents
marked attorney-client privilege to Mr. Charles Hamel. That much
is clear.

Mr. DeFazio. I understand that. But we are trying to justify
theft from a home. And in justifying theft from a home, we are
saying a company policy was violated. You can’t have it both ways.
If you can obtain the phone records, and that is just a company
policy being violated, and it doesn’t violate any laws, OK.

In this case, we have got a company policy being violated but it
is OK to steal the records back. Your line of logic is not quite
linked together, not quite internally consistent. You see where the
point of discrepancy is.

You are saying you are pursuing an investigation in stealing
these documents from Mr. Hamel, because they were stolen from
the company, which you don’t know if that violates Alaska law. On
the other hand, in pursuit of this investigation you are obtaining
documents from the phone company. You don’t know if that vio-
lates phone company policy, but it doesn’t violate any law. Neither
of these things violates laws except the theft from Mr. Hamel’s
home.

Mr. Baldwin. Except for the fact, I think, the purpose of the
taking of the documents from Mr. Hamel’s home, which I believe
was to establish in an evidentiary fashion that this was, in fact, oc-
curring and the documents had, in fact, been there, were in his
home. The idea was to turn this over ultimately for civil or crimi-
nal litigation.

Mr. DeFazio. It just astounds me that, as an attorney, you think
it would be legal to do that, to go into someone’s home to remove a
document in order to establish something. I am astounded. I am
not an attorney. Perhaps my knowledge of law is greatly lacking,
but I can’t see that that is legal.

Yes, that’s legal, but the taking or copying of documents from a
company and mailing to someone is illegal clearly in your mind. It
is pretty — if that’s the state of the country, we are in worse trouble
than I think. Mr. Wackenhut, in the phone calls that were inter-
cepted — this came out yesterday — excuse me, I can’t refer to yester-
day — no, it was in the written statements of the — my recollection is
a written statement of one of the witnesses yesterday, said that
phone calls of Mr. Hamel were recorded, and I believe it has also
been restated today in Virginia.

My understanding, he used to go out and walk around a park
with a cellular phone and these were intercepted. Were they inter-
cepted by voice or were they intercepted by — you know, through
the transmission, i.e., was a device directed at Mr. Hamel so you
could hear his end of the conversation, a listening device, or was an
actual interception of the broadcast of a phone call taking place?

Mr. Wackenhut. I don’t know exactly how it was done, sir. All I
know is that they did intercept those calls and record them. I don’t
know the technique used.

Mr. DeFazio. We have got a Senator in deep trouble in Virginia
for having just possessed some tapes that someone recorded in such
a manner in Virginia from cellular phone calls. Apparently, it is a

violation of law in the State of Virginia if the cellular phone calls
were actually intercepted. Perhaps we can get to that at another
point.

Just in reference to one of my colleague’s earlier questions, do a
lot of papers come across your desk, Mr. Wackenhut?

Mr. Wackenhut. Yes, sir.

Mr. DeFazio. Piles and piles. If someone had sent you a docu-
ment that — you know it was one of many documents, it was — you
know, it had some bearing, it was somewhat important, but it was
in your pile, do you keep track of every document on your desk on
a daily basis and determine whether or not it is there tomorrow or
next week if it is something that isn’t just absolutely crucial on the
top of your list?

Mr. Wackenhut. Most of the papers I go through, sir, I mark for
distribution and put them in my out box and then they are distrib-
uted.

Mr. DeFazio. So you might not miss something — you have seen
it, you looked at it, filed it, and sent it to the appropriate person?

Mr. Wackenhut. Quite possible.

Mr. DeFazio. OK. The point I am trying to make is, I think in
the case of Mr. Hamel and many of the rest of us, you get a lot of
mail and you don’t necessarily notice something is missing until
someday you are looking for it and you are not sure you misfiled it
or sent it on to someone else, or what you did with it. I don’t find it
remarkable the gentleman didn’t file a complaint for something he
didn’t know was missing.

Thank you, Mr. Chairman.

The Chairman. Mr. Taylor, you passed on this round. Do you
wish

Mr. Taylor. Please.

Mr. Wackenhut, as I understood when you opened your state-
ment, you pointed out that Mr. Hamel had said that he and the
chairman of this committee were trying to set up the president of
Alyeska, or was that someone from Alyeska that said that?

Mr. Wackenhut. No, that was Mr. Hamel who said that — don’t
know it is a fact, but he did say it.

Mr. Taylor. I understand. You are going by the fact of what you
recovered. Your company was brought in for what seemed probably
at the beginning a regular industrial inquiry of material being
taken, being stolen from the company — I am sure trade secrets and
other things. This probably happens quite often, you probably par-
ticipated in this before as far as trying to recover or find leaks of

stolen information?

Mr. Wackenhut. Yes, sir.

Mr. Taylor. So as you got into the regular procedures of trying
to find this source or sources and trying to find who was receiving
the stolen goods, Mr. Hamel, through his own statements, said that
he was passing these stolen goods on to this congressional commit-
tee.

Mr. Wackenhut. Yes, sir.

Mr. Taylor. I think as I read your request for legal opinion, that
is not something you run into every day that most of the cases that
you find that the stolen information winds up or maybe even be
solicited by a committee of Congress.

Mr. Wackenhut. It is not regular that that happened, correct.

Mr. Taylor. As I read the request for some sort of legal opinion,
your opinion was not necessarily requested to see whether or not
you could investigate this committee, but as a request of saying
what do we do if we find these goods flowing to a congressional
committee.

Suppose, for instance, a member of this committee wandered in
while you were taping Mr. Hamel and the Ecolit folks and made
some statement, “Where are my documents this month?” What do
you do at that point?

Mr. Wackenhut. As was pointed out in one of these memos that
was just put before me this morning, sir, the instructions to Mr.
Black were that, if he were to be introduced to a Congressman and
Mr. Hamel wanted him to meet Mr. Miller or anyone else, he was
to immediately identify himself as Wayne Black, not as Wayne
Jenkins, and immediately discontinue all the surveillance activi-
ties.

Mr. Taylor. Thank you.

The Chairman. Thank you. Let me ask you a couple of questions.

You testified earlier that your son came to you; is that correct?
Along with Mr. Bernstein; is that correct?

Mr. Wackenhut. Yes, sir.

The Chairman. I don’t know if they told you my name or not,
but they told you a Congressman may be involved in the surveil-
lance of Mr. Hamel?

Mr. Wackenhut. Yes.

The Chairman. Then what transpired?

Mr. Wackenhut. I wanted to make sure that they got legal
advice immediately, because I didn’t like the sound of that. They
did and went with it to Mr. Richey, and the results were any inves-
tigation — alleged investigation or potential investigation of Con-
gressmen should cease and desist right then.

The Chairman. When you say, to seek legal advice, was your dis-
cussion around that issue? What was the nature of that conversa-
tion?

Mr. Wackenhut. It wasn’t a lengthy conversation. I just wanted
to be sure that we got Mr. Richey's advice on that. Mr. Black, him-
self, went down and contacted Mr. Richey and I wanted to know
what his decision was. And it was not to do it.

The Chairman. That was on May 16?

Mr. Wackenhut. My attorney tells me May 17. I don’t know for
sure.

The Chairman. May 17. When did they meet with Mr. Richey?

Mr. Wackenhut. He tells me the conversation with Mr. Hamel
was May 16 and he met with Mr. Richey on May 17.

The Chairman. On May 17. Then we have Mr. Richey’s memo of
May 22 that Mr. Richardson referred to. This all happened fairly
consecutively.

Let me refer you to a document that I think we have labeled
number 12. [See page 464.] It is my understanding this was again
submitted to us under the request of subpoena. These are the notes
of Mr. Richey’s partner who was in the meeting with Mr. Richey
and Mr. Black, to discuss this issue.

Apparently these are running notes of the meeting with back-
grounds on who Mr. Wellington is, who Mr. Hermiller is, who
Chuck Hamel is. It says he was the original subject of the investi-
gation. Then on the next page it says, “if we're able to prove that
Miller’s goal is to enrich Hamell [sic], then it might be sufficient if
he only receives the documents.” So there was a discussion about
what they might have to prove in this case.

Then he makes a notation on the next page. It says the “benefits
of going after Miller” — and I believe, the “downside of going after
Miller.’ 7

And he goes on to mention a possible “motion to suppress the
documents — if we can prove that Miller encouraged theft.”
“[M]aybe suing Miller” was discussed, apparently, and “we need to
approach the appropriate people in Congress to maintain confiden-
tiality of the documents.”

Then in the middle of that page he claims that the best goal is
“getting Miller and Hamell [sic] indicted for encouraging theft of
property.”

“Hamell [sic] wants Miller to see Wayne Black to discuss how he
and Miller can use the material. Wayne wants Miller to admit that
he is using stolen documents.” [See page 469.]

“Our investigation has reached the stage where we need to
pursue allegations against Congressman.” [See page 475.]

Mr. Wackenhut. This document came to my attention only this
past weekend and I personally spoke to the attorney that made
these notes. These are not

The Chairman. This is Mr. Goodman?

Mr. Wackenhut. Mr. Goodman. These are not conversations.
These are Mr. Goodman’s notes as he was thinking through what
should take place, and I think Mr. Richey can throw more light on
this than I can, sir.

The Chairman. OK. So when Mr. Goodman states that the best
goal is to get Miller and Hamel indicted, he is just sort of musing
to himself. He is not responding to what is going on in the room.
That is what you are telling us.

Mr. Wackenhut. This was not as a result of what was going on
in the room. This, as I understand it, took place after the meeting,
and he was just making notes of the things that had been said.

The Chairman. When he says with a star next to it, “our investi-
gation has reached a point where we need to prove allegations
against the Congressman,” these are just the musings of an attor-
ney?

Mr. Wackenhut. You know you are asking me to tell you what
is in the mind of some attorney.

The Chairman. I am asking you what your impression is of that
because you go from that to the point where the suggestion is that
then there was this legal opinion drafted by Mr. Richey which con-
cludes that you shouldn’t do any of this. In fact, as Mr. Richardson
points out, this legal opinion never arrives at that conclusion.

This legal opinion arrives at a decision that people will have to
weigh the cost and the benefits of such actions. Whether you can
assume different identities; whether you can tap. It really provides
a road map should you decide to proceed against the Congressman,
supposedly unknown to him, but nevertheless a Member of Con-

gress. And your statement was that the investigation included only
a trip to the library and nothing more.

Mr. Wackenhut. There was discussion, I have been told, with at-
torneys as to what Mr. Hamel was telling the investigators. Now
the big question in everybody’s mind then and now would be — and
believe me, I am an expert on this, because our company in the
last 3 months has been accused of everything but the invasion of
Kuwait — that this discussion about Congressman Miller was
coming from Hamel.

Was Hamel blowing smoke or did Hamel really have this in with
you and was being encouraged by you to furnish stolen documents?
That was the question at the time. Should we go further to attempt
to identify that situation' or not? The decision was not. That’s the
bottom line, sir.

The Chairman. I understand that’s your testimony. As I believe
we will see later this afternoon, the fact is the question was some-
what more open than that on this consideration. It is not as simple
as your opening statement suggesting that the only thing that took
place here was somebody went to the public library and returned,
and that was the end of it.

Mr. Wackenhut. Something overtly, yes, that was the overt
action.

The Chairman. That is your testimony. I am suggesting it is not
quite that simple. I think I am also suggesting, as Mr. Richardson
started to suggest, that the focus still was on this committee.

Mr. Wackenhut. No, not this committee.

The Chairman. That is your testimony. I am suggesting we will
see, in fact, the focus was on this committee and on the staff of this
committee much after you suggest people only went to the library.

Mr. Wackenhut. Hopefully Mr. Richey can clear that up. I stand
on my testimony, Congressman, that the committee was not in-
volved, no other Congressman involved, no other Congressman’s
name was mentioned. It was your name. And you have continually
felt that all this was to chill any investigative activity you were en-
gaged in with this committee. From my standpoint, that was not
the case.

The Chairman. Mr. Richardson.

Mr. Richardson. Mr. Wackenhut, do you know who Daniel Lawn
is?

Mr. Wackenhut. No, sir, I don’t. I know his name was men-
tioned in the investigation.

Mr. Richardson. Daniel Lawn, at the time this document — Mr.
Chairman, by the way, is financial records, credit information,
which cannot be made public, but which every one of my col-
leagues has a copy of, it is the financial and credit information of
Mr. Daniel Lawn.

Daniel Lawn, at the time these records were obtained, was at the
State of Alaska’s Department of Environmental Conservation. One
of his areas, he oversees activities by Alyeska and other energy ac-
tivities in the State of Alaska.

My question is: Why would an investigation on purloined docu-
ments obtain financial records of a public official like Mr. Daniel
Lawn. This is case number 427, contact: Rick. It is a Wackenhut
document.

Mr. Wackenhut. I don’t know, sir.

Mr. Richardson. Does it strike you as strange that this kind of
information would be obtained in the course of this investigation?

Mr. Wackenhut. My understanding was that the investigators
were attempting to find out as much as they could about people in-
volved, either with Mr. Hamel or about Mr. Hamel. They were
posing as environmentalists. They are not environmentalists. They
don’t know the names, they don’t know the activities of the envi-
ronmentalists, they were attempting to find out. That is my guess
and that is all it is, because I don’t know.

Mr. Richardson. Daniel Lawn is a public official in charge of en-
vironmental conservation in the State of Alaska. Was there a sus-
picion that he was involved in some of the leaks?

Mr. Wackenhut. I don’t know. I don’t think so.

Mr. Richardson. Mr. Wackenhut, yesterday an employee — a
former employee by the name of Mercy Cruz, in response to a sub-
poena, provided for the record — and this is for the public record,
Rick Lund’s charges on the telephone records, and I want to pass
those on to you, because my understanding has been is that I guess
we have had some difficulty obtaining some of the billing records
from Wackenhut. [See page 481.]

Is it your understanding that these special services, as of March
1, 1990, the following charges are implemented? Is this correct in-
formation?

Mr. Wackenhut. I don’t know what this is, Congressman.

Mr. Richardson. This is the amount of money that Mr. Lund
paid for specific telephone information. This is according to Mercy
Cruz, who submitted this for the record yesterday in response to a
subpoena. She claims they are Rick Lund’s charges, and she typed
the list.

Mr. Wackenhut. Well, I have no knowledge of this. I don’t know
what it is. If she said it was Mr. Lund’s billing for something, per-
haps it was. I don’t know.

Mr. Richardson. Mexican toll records, $175. U.S. Sprint, $95,
verbal. Hard copy of total records, AT&T, $145. 60 days of posted
toll records, $50. Names of nonpublished numbers, $175. Nonpub-
lished number, address, $60. Canadian criminal, $120. Military
criminal, $175. Credit card records, $85. Utility records, $85. You
are not aware of it?

Mr. Wackenhut. No. It’s the first I have seen it.

Mr. Richardson. I think here, May 23 document, Wackenhut
report of investigation prepared for Alyeska you have in a chart
Mr. Lawn as a source of a leak for Mr. Chuck Hamel — and I think
you already have that. Associations. All right. It’s the May 23 docu-
ment given to Alyeska that you prepared. [See page 450.]

Mr. Wackenhut. Not that I prepared, that Mr. Black apparently
prepared, yes.

Mr. Richardson. Right. Mr. Lawn’s name is here along with Ken
Adams, Price Ahtna, Robert Scott, Attorney General Bailey, Riki
Ott, Gloria Ewell and George Miller.

Mr. Wackenhut. I have never seen this before, sir.

Mr. Richardson. Well, it was prepared by Wackenhut. This is
the report of investigation prepared for Alyeska Pipeline.

Mr. Wackenhut. Yes, according to the memorandum, it was pre-
pared by Wayne Black for Mr. Wellington.

Mr. Richardson. Why would the credit records of Mr. Lawn be
part of this?

Mr. Wackenhut. I answered that before, sir, I don’t know.

Mr. Richardson. Were credit records also obtained for Ken
Adams and Price Ahtna and Robert Scott?

Mr. Wackenhut. From this document, I would assume that these
people were suspects as far as being sources of documents going to
Hamel were concerned.

Mr. Richardson. Who is Gloria Ewell?

Mr. Wackenhut. Fictitious name, I am told, that was used as a
mail drop for Mr. Hamel, so his name would not be found on the
envelope.

Mr. Richardson. Price Ahtna, who is that?

Mr. Wackenhut. I have no idea.

Mr. Richardson. Ken Adams.

Mr. Wackenhut. I don’t know that, either, sir.

Perhaps Mr. Wellington can explain this to you, I can’t.

Mr. Richardson. Why would Mr. Wellington? This is a Wacken-
hut report.

Mr. Wackenhut. To Wellington.

Mr. Richardson. But, was it not drafted by Wackenhut, by
Wayne Black, May 23, 1990, to Mr. Wellington. Why are you put-
ting it all on Mr. Wellington.

Mr. Wackenhut. Because I don’t know the answer. I am suggest-
ing perhaps Mr. Wellington does.

Mr. Richardson. Thirty other sources are also identified here as
potential leaks. Did you find them?

Mr. Wackenhut. I don’t know how many were eventually found,
but that was the purpose of the investigation as I said a number of
times.

Mr. Richardson. I understood you said you think there were
about four or five sources.

Mr. Wackenhut. That I think were definitely identified.

Mr. Richardson. The thirty others were not.

Mr. Wackenhut. I don’t know, sir. Apparently they were sus-
pected of being sources. Whether it was proven they were is an-
other thing.

Mr. Richardson. Mr. Wackenhut, you strike me as somebody
that is very hands-on. You have obviously been very successful in
your business and you do some very good work in my State, but it
strikes me that you would not be aware of a report done by Mr.
Black — this is the first big assignment for the investigation. Just
strikes me — you are not aware of it?

Mr. Wackenhut. No. I believe Mr. Bernstein was aware of this
and he attended the various meetings held with Mr. Wellington, I
did not.

Mr. Richardson. Thank you, Mr. Chairman.

The Chairman. Who has questions? Mr. Marlenee?

Mr. Marlenee. Mr. Chairman, I reserve the balance of my time.

The Chairman. Mr. DeFazio.

Mr. DeFazio. Thank you, Mr. Chairman. I have one additional
document, apparently labeled item No. 4. Could the staff — a memo

to Pat Wellington from Wayne B. Black dated March 7, 1990. Could
the staff provide a copy to the committee and Mr. Wackenhut? [See
page 482.]

Mr. DeFazio. We’ll give you a minute or two to read this. Quite
short.

This goes in particular to my last line of questioning which dealt
with the legality or illegality of stealing documents which are al-
leged to have been stolen and stealing those documents from Mr.
Hamel. In the last round, I concentrated on how this paralleled the
receiving of documents from the phone company which might vio-
late phone company policies.

Now I would like to expand a little bit on that and look at — I
guess Mr. Black is not an attorney; is that correct?

Mr. Wackenhut. That’s correct.

Mr. DeFazio. So although this sounds like the rendering of some
sort of legal judgment, or legal advice, it is really just sort of a
musing by Mr. Black on this issue.

Now it says here that — and either of you can address this. If you
recall my former line of questioning, it was the propriety or how
anyone could think it was potentially proper to steal the docu-
ments from Mr. Hamel’s House. The gist was, if they were stolen
documents and a violation of law occurred in the original obtaining
of the documents, then those documents would not be — would be
OK to steal them again.

Now here we are talking about State law and Federal law, and
we are talking about the Whistleblower Protection Act. It says
under Federal law it would be disclosure of the information to
anyone, which is considered protected. I guess probably your attor-
ney — do you share Mr. Black’s legal opinion here?

Mr. Baldwin. Congressman, I don’t know. I haven’t done re-
search on the Federal or State law, whistleblower laws.

Mr. DeFazio. The next says there may be a secrecy provision
which would prevent an employee from disclosing proprietary in-
formation.

Are you aware of Alyeska having a secrecy provision similar to
that which is described here?

Mr. Wackenhut. No, sir. I am sure the Alyeska people can
answer that.

Mr. DeFazio. I am asking your attorney because he’s been doing
research on this.

Mr. Baldwin. No, sir. I don’t know yet if Alyeska has such a
policy.

Mr. DeFazio. So you don’t know if they have a secrecy policy.
We don’t know if the laws of Alaska would allow disclosure. Ac-
cording to Mr. Black, it may be all right under Federal law, the
whistleblower to disclose such information. Then how do we reach
the conclusion it was somehow proper to steal the documents
which are alleged to have been stolen from Mr. Hamel’s House?
What do we base that on?

Mr. Baldwin. Congressman, if a piece of property — if a piece of
property is identified as an attorney-client document, and the indi-
vidual that that document was taken from is aware that that docu-
ment is gone, then you either waive the privilege by not trying to

get it back, or you try and get it back and thereby retain the privi-
lege.

A lot of these documents were marked clearly as attorney-client
documents. And whether Alyeska has a policy in regard to all of its
documents or specific documents, it quite clearly, by marking a
legal document as attorney-client privilege, would be stating its
policy that this is not to be disclosed.

Mr. DeFazio. Well, this is really a tangled web we weave. We
enter into a home in Virginia and we steal some documents from
that home while employees of The Wackenhut Company, under
contract to the Alyeska Pipeline Company — we have Federal laws,
State laws, company policies involved, yet we don’t seem to know
if, you know, any of those were violated except probably the theft
of the document from Mr. Hamel’s home.

I mean, that is pretty clearly problematic under Virginia law,
wouldn’t you think? I know you’re not an expert on Virginia law,
but I think that’s a little bit problematic. If someone comes into my
house and picks up a letter off my desk and takes it out and
doesn’t ask me if they could remove it, I think, whether or not I
filed a complaint over the next 18 months and missed that docu-
ment, if I find out subsequently I think perhaps they have a prob-
lem.

Mr. Baldwin. I think if it is their letter, it is a different situa-
tion.

Mr. DeFazio. If it is their letter, if it’s a copy of that letter, is
that the situation? If it’s not the actual letter, but a copy?

Mr. Baldwin. I don't know. We don’t know what that situation
was. It’s hard to address.

Mr. DeFazio. Right. Someone removed the documents but we
don’t know what the situation was. I would hope The Wackenhut
Company doesn’t normally engage in such practices of removing
letters from people’s home, and not knowing what the situation
was, what the company policies were, what the laws of various
States were, and how it might or might not pertain to Federal law.
Is that a normal practice, Mr. Wackenhut, of your company and/or
your special investigation division?

Mr. Wackenhut. We are looking into that right now, Congress-
man. That is why we have a special committee of the board as well
as a battery of attorneys researching into this. They are research-
ing the law to find out. As the board will determine, if there have
been irregularities, we will certainly fix them.

Mr. DeFazio. Well, I am not sure how you fix something like
this, but I guess that is the end of my questioning.

Thank you, Mr. Chairman.

Mr. Young. Are we going to take a break?

The Chairman. Thank you.

I would like to finish with Mr. Wackenhut.

Mr. Taylor. I was hoping we could get along since Mr. Wacken-
hut, clearly from what he is saying, a lot of the information is with
two witnesses coming beyond him. I would hope we could get to
them as quickly as possible.

The Chairman. Our problem is Mr. Wackenhut is the only man-
agement that we have access to at this time and his company ran
this investigation, so we are doing the best we can to determine the

information that he has available to him that will be helpful to
this committee.

Mr. Taylor. Might we reserve his right to come back?

The Chairman. We are going to reserve that right, yes.

Mr. Richardson.

Mr. Richardson. Mr. Chairman, I have one question. It is a
rather long one. Mr. Wackenhut, I want to refer to a memorandum
from Rick Lund and Gary Crep, April 23, 1990 to Pat Wellington,
undercover investigation Valdez, Alaska. [See page 483.]

Mr. Richardson. Now this memorandum — first of all, do you
have that?

Mr. Wackenhut. No. No, sir, I don’t.

Mr. Richardson. April 23, 1990.

The Chairman. Let’s wait until the

Mr. Taylor. Do we have it, Mr. Chairman?

Mr. Wackenhut. Go ahead, sir.

Mr. Richardson. This memorandum from Mr. Lund to Mr. Wel-
lington describes a trip to Valdez by Lund and another Wackenhut
investigator by the name of Gary Crep. As you can see, the memo
describes in detail the activities of Mr. Lund and Mr. Crep for over
1 week.

What they did in this investigation is they installed covert video
equipment in a hotel room for the purpose of recording conversa-
tion — whose conversations? They intended to lure Alyeska employ-
ees and other citizens of Valdez into the wired room under the pre-
text of being Ecolit researchers looking for information about
Alyeska and the oil companies.

Don’t you think, Mr. Wackenhut, this is casting the net a little
far if the purpose is to find the source inside Alyeska who leaked
legal documents?

Mr. Wackenhut. Again, I am not privy to what they had in
mind, but I would think that in Valdez the majority of people there
that could possibly answer the advertisement or come forward in
any way would be Alyeska employees. And if you keep in mind the
object of the investigation was to find out who was taking the docu-
ments and sending them to Mr. Hamel.

It was all part of what we were trying to do. It was an effort to
get names and find out if they could possibly be the ones involved
and plug the leak. That was the center and circumference of the
entire investigation.

Mr. Richardson. I understand, but what do you suppose Mr.
Lund would have done had some unsuspecting Alyeska employee
been videotaped giving him information on serious violations of en-
vironmental regulations? Don’t you think those tapes would have
been turned over to Alyeska?

Mr. Wackenhut. I can only speculate again, Mr. Richardson. I
would imagine if there were violations found in connection with
the operation up there, that the first people we would go to would
be the Alyeska people with the recommendation that they have a
problem and that they should take some action on it. We would
also seek legal advice to find out if we had the legal requirement to
report this as far as an environmental problem was concerned.

Mr. Richardson. I understand. The thrust of this question is this
investigation is beyond the bounds of what — of just determining
what you need to know.

Let me give you a case in point. This memorandum also de-
scribes Lund’s and Crep’s meetings with an individual named Bob
Swift. Bob Swift is a Valdez bartender who they met in his place of
business. This man was originally from Florida and befriended
them.

They talked for hours, local businesses, met him for dinner an-
other night and even stopped to say goodbye before leaving. Yet at
the same time they are befriending him, they are also checking
him out. What did they obtain? Motor vehicle registration, driver’s
license, police department, property and financial information
about Mr. Swift.

This information is part of the committee record, but we see no
reason to release it public. Any Member who wishes to see it may
do so. My question is: What would be the connection with Mr. Bob
Swift, a Valdez bartender and the stolen documents of Alyeska?

Mr. Wackenhut. Again, speculation on my part, sir. It would be
to develop contacts in and around Valdez to again get to the
source.

Mr. Richardson. And you need this guy’s driver’s license infor-
mation, police records, vehicles registered in Florida, his property,
financial information, Social Security number.

Mr. Wackenhut. Just to know who they are dealing with, I
guess.

Mr. Richardson. I mean this guy bought him a drink, had
dinner with them and he is investigated.

My point here is, I don’t want to overdo this, but is there anyone
who isn’t fair game for your investigators? Don’t you feel looking
back in hindsight that this investigation was a little bit overdone?

Mr. Wackenhut. We will determine that as we continue on with
our own internal investigation, Mr. Richardson.

Mr. Richardson. You are doing that? Your own inspectors gener-
al are doing that?

Mi*. Wackenhut. No, an outside law firm is doing it, together
with a board of directors of the company. We are very serious
about this whole thing.

The Chairman. Thank you.

Mr. Taylor.

Mr. Taylor. No, I’m ready to say goodbye to Mr. Wackenhut and
go on to the other two.

The Chairman. Mr. Wackenhut, let me have you look at a docu-
ment from the Ecolit Group, from Mr. Wayne Jenkins, Ph.D.,
which we have established clearly is Mr. Wayne Black. [See page
499.] That is correct, right, in your testimony and elsewhere we es-
tablished that Ecolit is a phony environmental group created for
the purposes of this investigation. We have established that.

Mr. Wackenhut. Yes, sir.

The Chairman. Mr. Jenkins is the pseudonym that Mr. Black
was using for the purposes of this investigation.

The letter is written to Mr. Ken Ewell, who is CEO of Manage-
ment Information Technologies, Inc., known as MITI, a computer
company in which Mr. Hamel owns a part interest. The letter here

is unsigned, but Mr. Black admitted to the attorneys representing
Alyeska’s Owners Committee he sent it to Mr. Hamel and MITI by
telefax.

The letter says, “Dear Ken: We enjoyed meeting with Charles
Hamel, Richard and you yesterday regarding your software. I
would like to propose the following:

“Please consider providing the software to us for use and demon-
stration through our contacts in the legal community in South
Florida and various parts in the United States. In return, we will
critique the software as it applies to being friendly to paralegals
and lawyers. When the software becomes the catalyst in a win in
one of our cases, we will reimburse you for the costs. In the mean-
time, you would have our feedback as to how the software works.

“Thanks again for the visit and demonstration and for your con-
sideration of this proposal.

So we now know — and, Mr. Wackenhut, you know — that Dr.
Wayne Jenkins, Mr. Black, obtained this software free of charge, if
you will, based upon this representation?

Mr. Wackenhut. I learned about this just this past week. We
were charged for it, $6,000 if I am not mistaken, which wasn’t paid
when we sent it back. I am advised by my attorneys that MITI and
Mr. Hamel used the readware to store information stolen from
Alyeska. In an effort to recover the stolen documents, the investi-
gator responded positively to Mr. Hamel’s offer to use that soft-
ware. There was no intent to defraud anyone. There was only an
attempt to secure evidence of Hamel’s and MITI’s criminal acts
and turn that evidence ove to prosecutors and the courts.

The Chairman. According to that statement, this would fall
under your traditional and standard ways of pursuing the investi-
gation?

Mr. Wackenhut. This particular investigation, apparently.

The Chairman. What does that mean, this particular investiga-
tion? Is this in conformity with, everything we do at Wackenhut is
legal and that this is standard and traditional?

Mr. Wackenhut. You keep bringing up standard and traditional
in a case that was not standard and not traditional. Everything
that happened had to be discussed and had to be handled at that
particular time. There was no instruction book we could turn to or
the investigators could turn to in these matters.

The Chairman. Well, let me refer you to the Report to the
Owners Committee of the Alyeska Pipeline Service Company. [See
page 500.] For the record, this is from Paul, Hastings law firm
which is where, Los Angeles; is that correct?

Mr. Wackenhut. Yes.

The Chairman. First, let me say, on page 40 of that, you just
said you had the belief Alyeska documents had been input by MITI
into the MITI software. That that turned out to be erroneous and
Mr. Lund apparently learned that.

But also, let me suggest that, when you say everything in this
investigation was somehow special and therefore had special rules
that were not standard, apparently that was also determined by
Paul, Hastings when they reviewed the liability of the Owner Com-
panies. They say, “With respect to both mail fraud and wire fraud,
because Wackenhut used the U.S. Postal Service in the operation

of Ecolit, engaged in interstate telephone and telefax communica-
tion to establish and maintain Ecolit, and engaged in interstate te-
lefax and telephone communication to induce MITI to provide
Wackenhut with the software program, a Federal prosecution could
be brought under either or both of the mail fraud and wire fraud
statutes.” [See page 551.]

Mr. Jordan. Mr. Chairman, I am counsel for Alyeska. I believe
this document is being distributed to the press. I understood under
the procedure adopted, the chairman was to make the determina-
tion about the use of documents provided under Executive Session
agreement for use of the Members in connection with the conduct
of this hearing. I don’t believe we contemplated their use and dis-
tribution to the press.

The Chairman. No, that contemplated their distribution for the
record and distribution for all parties.

On page 45, “[a] computer software program has been held to be
property or goods for the purpose of the interstate transportation
of stolen property. See United States v. Riggs, 739 F. Supp. 414. . . .
A Federal action could be brought under the interstate transporta-
tion of stolen goods statute assuming that the MITI software pro-
gram is of a value of more than $5,000 and was transported across
State lines.” That doesn’t sound like everything is legal at Wacken-
hut and that you have standard procedures.

Mr. Wackenhut. Have I said 100 times we don’t have standard
procedures for an unusual investigation.

The Chairman. What are the guidelines for an unusual investi-
gation, Mr. Wackenhut?

Mr. Wackenhut. As I said before, sir, we take them as they
come and check with the attorneys, and I think Mr. Richey will
discuss this to your satisfaction.

The Chairman. With all due respect to Mr. Richey and your
firm, this review after the fact by the Owner Companies suggests
these activities that were ongoing in this investigation, and not just
this activity with respect to MITI and this letter, run afoul of the
law throughout the process.

When was this checking with the attorneys done? Did they check
with the attorneys before they could check on a bartender who
bought them a drink in Alaska?

Mr. Wackenhut. Our outside attorneys don’t believe that the
conclusions reached by this law firm are accurate.

The Chairman. That is why they make more than one law firm.

Mr. Wackenhut. I guess so.

Mr. Young. God help us.

The Chairman. So your outside attorneys believe these actions
were all legal. As you stumbled across environmental groups and
picked up their trash, as your investigators stumbled across a bar-
tender, as your investigators stumbled into Mr. Hamel’s house,
that was legal. As they misrepresented themselves to a computer
firm that had a valuable work product, that was legal. Their mis-
representations as the Ecolit Group to other parties were all legal.

Their attorneys have told the Owner Companies they are expos-
ing themselves to legal liability. The Owner Companies, as far as I
know, were not out doing this. Alyeska was their agent, and you
became Alyeska’s agent for the purpose of this investigation.

Mr. Wackenhut. Yes, sir, if I can practice

The Chairman. Whether identities are shielded, apparently
there is some discussion within the Owner Companies and within
the law firm that that may be pierced for the purposes of legal li-
ability.

Mr. Wackenhut. If I can practice law without a license for just a
moment, sir, I understand to have fraud you have to have intent.
There was no intent to defraud. The equipment was sent back.

The equipment, as a matter of fact, was never used. It had been
expected to be used. The idea was to get the names that were in
that computer, again looking for the Alyeska leak. It all goes back
to the same thing.

The Chairman. There was no intent when Mr. Jenkins signed
this letter under a phony letterhead, under a phony name? There
was no intent?

Mr. Wackenhut. Yes, sir, no intent.

The Chairman. It is good you don’t have a license to practice
law.

Mr. Wackenhut. No intent to defraud.

The Chairman. I guess that is why there is a rhyme and reason
to law school.

Mr. Young. I haven’t seen it yet.

The Chairman. Is that what you want? You want us to believe
there was no intent.

Mr. Wackenhut. To defraud. There was no intent to defraud.

The Chairman. Well, let’s just take that apart for a second here.
You said you took this for the purpose of seeing whether that soft-
ware had Alyeska documents loaded on it; is that correct?

Mr. Wackenhut. That is what I am told.

The Chairman. The letter says you were going to use it in litiga-
tion on behalf of environmental causes in south Florida and else-
where. Maybe Mr. Black was under the influence of drugs or some-
thing when he wrote that so he wouldn’t have intent. What is
going on here?

In the conversation in my office, and you repeated it here this
morning, that an old and dear client came to you with a problem
and you wanted to perform on behalf of that client, the Alyeska
Corporation. You have had an ongoing contract with Alyeska for a
period of years which, by your own admission, is a substantial part
of your business, substantial revenues.

Mr. Wackenhut. Yes, sir.

The Chairman. This is what they get back? This is what they got
back. They got back a 95-page memo discussing their exposure to
State and Federal law. Got themselves a congressional hearing and
exposure to rather substantial civil litigation.

Mr. Wackenhut, why did the Owner Companies call off the inves-
tigation?

Mr. Wackenhut. I have no idea, sir.

The Chairman. Mr. Wackenhut, you are the CEO and president
of a corporation that bears your name. An old and dear client just
called off his relationship with your newly formed investigative
unit. That investigation again represents a service you tried to pro-
vide to a client with which you have a much larger contract, and
you have no idea?

Mr. Wackenhut. No, sir I have no idea why they canceled the
investigation. They can tell you, I am sure. I don’t know.

The Chairman. You don’t have any idea what the functionaries
in your company at the lower level are doing, and you don’t have
any reasons, any idea why major clients of yours cancel contracts.
What do you have an idea about other than apparently there was
not the intent to defraud.

Mr. Wackenhut. They canceled the investigation. A client can
stop or start an investigation whenever he chooses.

The Chairman. You would not ordinarily be concerned when
this happens. United Airlines runs a commercial flight and a client
says, we are not using this anymore, folks. What are they going to
do? They are going to find out why. They go out flying around to
bring the business back. But this is just sort of, well, I guess it
didn t work out?

Who are we talking about here. We are talking about major
international oil companies that run a system that provides 25 per-
cent of the domestic oil to this country through an integrated
transportation system for which you are responsible for providing
the security. They tell you they have a major headache, and they
do. Mr. Hamel, through all of his actions with respect to this com-
pany has caused this entity, Alyeska, to spend tens of millions of
dollars complying with the law where they were not previously in
compliance, apparently due to information supplied by Mr. Hamel
to the EPA, to the United States Senate, to the House of Repre-
sentatives, and to various State and local jurisdictions. They have

got a problem out there.

They come to you to solve that problem, and you deliver to them
Mr. Scott who they deliver to you because of a handwriting analy-
sis done even before Wackenhut was brought in. Now that doesn’t
sound like a corporate relationship where the CEO just walks away
and says, I don’t know why they canceled this.

Have you been in communication with the Alyeska Corporation
about this?

Mr. Wackenhut. Mr. Bernstein has been.

The Chairman. Mr. Bernstein has been, but has he told you?

Mr. Wackenhut. With Mr. Wellington.

To my knowledge Alyeska has not told us why the investigation
was stopped, and I don’t know why.

The Chairman. OK. That’s your testimony.

Mr. Young.

Mr. Young. Are we through?

The Chairman. I’m through. Any further questions?

Mr. Young. Mr. Chairman, I just want to make one comment to
Mr. Wackenhut. You have been asked a lot of questions and you
answered them to the best of your ability. I also would suggest one
of the greatest fears of a Congressman is to be at the witness table.
You have been there for now 2% to SV 2 hours.

I have had the ability to get up and go do other things and I
want to compliment you, as I will every witness, on their presenta-
tion of what they believe happened. Our role in this committee is
to find out all the facts without having any preconceived ideas.

I will say, though, Mr. Chairman, I want to know the ground
rules because the gentleman interrupted the hearings on what will

be submitted and what will not be submitted and what will be
given the press. It is my understanding that everything that you
and I have received now is available to the press or is that at a
later date?

The Chairman. It’s available to the press and a part of the
record of this committee. This is the public portion of this hearing.

Mr. Young. Everything said in this committee other than the
Executive Session.

The Chairman. Correct.

Mr. Young. Everything submitted or anything asked to be sub-
mitted.

The Chairman. Subcommitted by a Member of the committee.
Yes.

Mr. Young. Any Member of the committee that requests any
documentation given to us by Alyeska or Wackenhut will be at the
request of any Member available to the general public.

The Chairman. No, as the previous agreement between the
Chair and the gentleman from Alaska, that is a matter of negotia-
tion between us because, as we know, some documents that were
given to us are private. They involve parties, private lives, that are
not related to this discussion and there were expectations as to pri-
vacy when they were delivered to the committee.

Mr. Young. I just

The Chairman. Documentation can be offered for that purpose,
and then we will have to make a determination.

It is the intent of the committee to recess for an hour.

Mr. Wackenhut, we thank you for your time and your testimony.
As pointed out by Mr. Taylor, we do reserve the right to recall you
as we proceed through this ongoing investigation. Thank you.

Mr. Wackenhut. I’ll be here. Thank you.

[After recess.]

The Chairman. The committee will reconvene for the purposes
of taking testimony from Mr. William Richey, outside counsel of
the Alyeska Pipeline Service Company; Mr. James Hermiller,
president of the Alyeska Pipeline Service Company; Mr. J. Patrick
Wellington, manager, Corporate Security, Alyeska Pipeline Service
Company.

It is the practice of this committee to swear all witnesses who
appear before it at investigative hearings. Do you have any objec-
tion to being sworn? Will you please rise?

[Witnesses sworn.]

The Chairman. In order to inform you of your rights as wit-
nesses before the committee and the limitations of the authority of
the committee, the rules of the committee are before you on the
table and both sets have been provided to you previously.

You are advised of your right to counsel. The role of counsel
would be to advise you of your constitutional rights. Do you desire
to be represented by counsel? Yes, no, and otherwise. Mr. Richey,
do you have counsel?

Mr. Richey. Mr. Jordan is my counsel.

The Chairman. Would you, the counsel, identify themselves?

Mr. Feffer. My name is Gerald A. Feffer. I am an attorney prac-
ticing in Washington, DC., and I am counsel for Mr. Hermiller.

Mr. Jordan. I am Robert Jordan, an attorney practicing in
Washington, DC. I am counsel for Alyeska and also counsel for Mr.
Richey here today.

Mr. Webster. I am Kenly Webster, an attorney practicing in
Washington, DC., and I am attorney here today for Pat Wellington.

The Chairman. Mr. Richey, we will begin with your statement.

PANEL CONSISTING OF WILLIAM RICHEY, ESQUIRE, OUTSIDE

COUNSEL, ALYESKA PIPELINE SERVICE COMPANY; JAMES B.

HERMILLER, PRESIDENT, ALYESKA PIPELINE SERVICE COM-
PANY; AND J. PATRICK WELLINGTON, MANAGER, CORPORATE

SECURITY

Mr. Richey. Thank you very much, Mr. Chairman, Mr. Young,
and Members of the committee. Good afternoon. My name is Wil-
liam Richey and I am a partner at the Miami, Florida, law firm of
Richey, Munroe, Fine, Goodman and Armstrong.

I am a graduate of Harvard Law School and have practiced law
for the past 17 years. Before entering private practice, I was a pros-
ecuting attorney with the Florida State Attorney’s Office in Miami,
11th Judicial Circuit, where I served as the Chief of the Organized
Crime and Public Corruption Unit, and later was appointed chief
assistant State attorney.

Since leaving that position in 1981, my practice has focused pri-
marily on commercial fraud litigation and white collar criminal de-
fense.

I am here to testify today about my knowledge of facts relating
to the Wackenhut investigation. Let me begin by describing my ini-
tial involvement in that investigation and my perceptions about its
purpose.

I first became involved in the investigation on May 17, 1990,
when Wayne Black called to retain our services in connection with
what he described as an undercover operation. He gave me a brief
overview of the investigation on the telephone, and later that day
he met with me and with my partner, Jonathan Goodman, to pro-
vide additional background on the case.

He explained to us that sensitive, highly confidential materials,
including documents protected by the attorney-client privilege,
were being systematically stolen from Alyeska and that Wacken-
hut had been hired to find the source of these and other document
thefts and, if possible, to secure the return of the documents. I un-
derstood that this was the sole purpose of the investigation, and I
perceived no hidden agenda to target you, Mr. Chairman, or any
other Members of this committee or its staff.

In this regard, I would like to explain the context of my firm’s
May 22, 1990 legal opinion letter that has been the object of com-
mentary in the press. At our first meeting with Mr. Black, he told
us that on the previous day, within the previous 24 hours, he had
seen numerous attorney-client privileged documents belonging to
Alyeska at the home of Charles Hamel, who had been identified as
a likely recipient of stolen company documents.

He also informed us that Mr. Hamel had commented frequently
about his close relationship with Congressman Miller and that Mr.

Hamel asserted that he had provided the Congressman with infor-
mation obtained from the stolen documents.

It was my perception that Mr. Black was surprised by the extent
of Mr. Hamel’s purported relationship with Congressman Miller,
and that his request for our legal advice reflected concern about
the impact of this development on the investigation. We advised
Alyeska that special care would be necessary to avoid any risk that
the investigation could be misinterpreted as an attempt to interfere
with Mr. Hamel’s access to the committee.

Mr. Black asked us to set forth the basis for our concerns in a
formal opinion letter and to research as well the legality of record-
ing conversations in Virginia, Maryland and the District of Colum-
bia.

For my part, I asked Mr. Black to obtain some biographical infor-
mation to use as background for our opinion. I recall wanting to
know in particular whether you were an attorney, Mr. Chairman,
since an attorney would certainly appreciate the ramifications of
possessing stolen attorney-client privileged documents.

One of Wackenhut’s investigators obtained the information I re-
quested from a public library, and delivered it to my offices the
next day. I have attached copies of these materials to my state-
ment. As you can see, they are routine, public source documents
readily available at any library. To my knowledge, Wackenhut
never made copies of these materials, and I have been informed
that no additional background information about you was ever col-
lected during the investigation.

We completed our opinion letter on May 22, and I believe that it
was presented to Mr. Wellington at a meeting the following day. I
also understand that it was decided at that meeting to continue
with the existing investigation, but with the clear understanding
that no steps would be taken that involved any Congressman in
any way, and that the investigation would be terminated if it was
learned that Mr. Hamel was, in fact, an agent of Congressman
Miller or this committee. To my knowledge, these rules governed
the investigation throughout its course from that point forward.

After furnishing our May 22 opinion letter, Mr. Black kept us
generally informed of the investigation’s progress. He periodically
called us for legal advice on specific matters, which we provided.

We also attended meetings on August 3 and September 20, 1990,
where the status of the investigation was reviewed. We also dis-
cussed potential strategies at these meetings, including pursuing
both civil and criminal remedies against Mr. Hamel.

Since it was contemplated that the fruits of the investigation
would be made public and used in court, it was my impression that
everyone present understood the importance of conducting the in-
vestigation entirely within legal bounds.

I would like to comment on some of the investigative techniques
used in this case. I fully understood that Wackenhut was collecting
abandoned trash, purchasing telephone toll records, and videotap-
ing and recording its encounters with Mr. Hamel. Each of these
practices can be undertaken legally, and I was confident that Mr.
Black, who I knew had substantial experience in such matters, un-
derstood how to do so.

These techniques may seem intrusive, but the fact is that they
are common investigative practices in cases involving fraud and
criminal wrongdoing, and in my opinion, were wholly appropriate
to this case. You simply cannot rely on traditional investigative
techniques or the civil discovery process to obtain information from
individuals who, like Mr. Hamel, are known to be trafficking in
stolen goods or information.

These status conferences also reinforced my impression that the
only purpose of the investigation was to determine the source of
the leak within Alyeska and secure the return of the stolen propri-
etary information. I recall that Mr. Wellington, in particular,
stressed the importance of remaining focused on this goal at both
meetings I attended.

Shortly after the second status conference, I received a telephone
call from Lon Trotter of Alyeska, who informed me that the inves-
tigation had been shut down by the companies that own Alyeska
and no action against Mr. Hamel was likely to be pursued.

We had discussed this possibility at the September 20 meeting.
We had concluded that ending the investigation in such an abrupt
manner would be ill advised, because it would taint a wholly appro-
priate and well-run investigation with the appearance of a coverup.

Moreover, in my view, the plan to file a civil suit against Mr.
Hamel to recover the stolen documents should have gone forward,
notwithstanding the decision to terminate the investigation.

In addition to telling me that the investigation had been termi-
nated, Mr. Trotter asked for our advice on a number of legal ques-
tions relating to that decision. One issue he raised was the legal
consequence of destroying investigation files.

I must emphasize, however, that Mr. Trotter was not seeking
legal support for a decision to destroy the files. To the contrary, it
was my distinct impression that he wanted to be able to advise
against any such course of action should the issue ever arise. To
my knowledge, it never did.

We provided Mr. Trotter with a legal opinion on this and other
issues on January 17, 1991, after which our involvement in this
case effectively came to a close until this committee’s inquiry
began in August.

Mr. Chairman, I hope my testimony has been helpful and I am
prepared to answer any questions you or any other committee
Members may have in an attempt to assist this committee in un-
derstanding what I know about the process and what happened
here.

The Chairman. Thank you.

[Prepared statement of Mr. Richey, with attachments, follows:]

TESTIMONY OF WILLIAM L. RICHEY
Hr. Chairman, Mr. Young, Members of the Committees

Good Afternoon. My name is William Richey and I am a partner
at the Miami lav firm of Richey, Munroe, Fine, Goodman and
Armstrong. I am a graduate of Harvard Lav School and have
practiced lav for the past seventeen years. Before entering
private practice, I was a prosecuting attorney with the Florida
State Attorney's office, where I served as the chief of the
Organized Crime and Public Corruption Unit and later was appointed
Chief Assistant State Attorney. Since leaving that position in
1981, my practice has focused primarily on commercial fraud
litigation and vhite collar criminal defense.

I am here to testify today about my knowledge of facts
relating to the Wackenhut investigation. Let me begin by
describing my initial involvement in that investigation and my
perceptions about its purpose. I first became involved in the
investigation on May 17, 1990, when Wayne Black called to retain
our services in connection with what he described as an undercover
operation. He gave me a brief overview of the investigation on the
telephone, and later that day he met with me and my partner,
Jonathan Goodman, to provide additional background on the case.

He explained to us that sensitive, highly confidential
materials, including documents protected by the attorney-client
privilege, were being 'systematically stolen from Alyeska and that

- 2 -

wackenhut had been hired to find the source of these and other
document thefts and, if possible, to secure the return of the
documents. I understood that this was the sole purpose of the
investigation, and I perceived no hidden agenda to target you. Hr.
Chairman, or any other Members of this Committee or its staff.

In this regard, I would like to explain the context of my
firm's Hay 22, 1990 legal opinion letter that has been the object
of commentary in the press. At our first meeting with Hr. Black,
he told us that on the previous day he had seen numerous attorney-
client privileged documents belonging to Alyeska at the home of
Charles Hamel, who had been identified as a likely recipient of
stolen company documents. He also informed us that Mr. Hamel had
commented frequently about his close relationship with Congressman
Miller and that Hr. Hamel asserted that he had provided the
Congressman with information obtained from the stolen documents.

It was my perception that Hr. Black was surprised by the
extent of Hr. Hamel's purported relationship with Congressman
Miller, and that his request for our legal advice reflected his
concern about the impact of this development on the investigation.
We advised Alyeska that special care would be necessary to avoid
any risk that the investigation could be misinterpreted as an
attempt to interfere with Mr. Hamel's access to the Committee.

Hr. Black asked us to set forth the basis for our concerns in
a formal opinion letter and to research as well the legality of

recording conversations in Virginia, Maryland and the District of
Columbia. For my part, I ashed Mr. Black to obtain some
biographical information to use as background for our opinion. I
recall wanting to know in particular whether you were an attorney,
since an attorney would certainly appreciate the ramifications of
possessing stolen attorney-client privileged documents. One of
Wackenhut's investigators obtained the information I requested from
a public library, and delivered it to my offices the next day. I
have attached copies of these materials to my statement. As you
can see, they are routine, public source documents readily
available at any library. To my knowledge, Wackenhut never made
copies of these materials, and I have been informed that no
additional background information about you was ever collected
during the investigation.

We completed our opinion letter on May 22, and I believe that
it was presented to Mr. Wellington at a meeting the following day.
I also understand that it was decided at that meeting to continue
with the existing investigation, but with the clear understanding
that no steps would be taken that involved any Congressman in any
way, and that the investigation would be terminated if it was
learned that Mr. Hamel was, in fact, an agent of Congressman Miller
or this Committee. To my knowledge, these rules governed the
investigation throughout its course.

After furnishing our May 22 opinion lattar, Mr. Black kapt ua
generally informed of the investigation's progress. He

- 4 -

periodically called us for legal advice on specific matters, which
we provided. We also attended meetings on August 3 and September
20, 1990, where the status of the investigation was reviewed. We
also discussed potential strategies at these meetings, including
pursuing both civil and criminal remedies against Mr. Hamel, since
it was contemplated that the fruits of the investigation would be
made public and used in court, it was my impression that everyone
present understood the importance of conducting the investigation
entirely within legal bounds.

I would like to comment on some of the investigative
techniques used in this case. I fully understood that Wackenhut
was collecting abandoned trash, purchasing telephone toll call
records, and videotaping and recording its encounters with Mr.
Hamel. Each of these practices can be undertaken legally, and I
was confident that Mr. Black, who X knew had substantial experience
in such matters, understood how to do so. These techniques may
seem intrusive, but the fact is that they are common investigative
practices in cases involving fraud and criminal wrongdoing, and in
my opinion, were wholly appropriate in this case. You simply
cannot rely on traditional investigative techniques or the civil
discovery process to obtain information from individuals who, like
Mr. Hamel, are known to be trafficking in stolen goods or
information.

These status conferences also reinforced my impression that
the only purpose of the investigation was to determine the source

- 5 -

of the leak within Alyeska and secure the return of the stolen
proprietary information. I recall that Mr. Wellington, in
particular, stressed the importance of remaining focused on this
goal at both meetings I attended.

Shortly after the second status conference, I received a
telephone call from Lon Trotter of Alyeska, who informed me that
the investigation had been shut down by the companies that own
Alyeska and that no action against Mr. Hamel was likely to be
pursued. We had discussed this possibility at the September 20
meeting. We had concluded that ending the investigation in an
abrupt manner would be ill-advised, because it would taint a wholly
appropriate and well-run investigation with the appearance of a
cover-up. Moreover, in my view, the plan to file a civil suit
against Mr. Hamel to recover the stolen documents should have gone
forward, notwithstanding the decision to terminate the
investigation.

In addition to telling me that the investigation had been
terminated, Mr. Trotter asked for our advice on a number of legal
questions relating to that decision. One issue he raised was the
legal consequence of destroying the investigation files. I must
emphasize, however, that Mr. Trotter was not seeking legal support
for a decision to destroy the investigation documents. To the
contrary, it was my distinct impression that he wanted to be able
to advise against any such course of action should the issue ever
arise. To my knowledge, it never did. We provided Mr. Trotter

with a legal opinion on this and other issues on January 17, 1991,
after which our involvement in the ease effectively came to a close
until this Committee's inquiry began in August.

Mr. Chairman, I hope that my testimony has been helpful and
I am prepared to answer any questions you or other Committee
Members might have.

- 7 -

STATE OP FLORIDA
COUNTY OP DADE

Before me, the undersigned authority, personally appeared
william L. Richey, who is personally known by me and who is the
person whose name is subscribed to the foregoing documents. After
being duly sworn by me, William L. Richey has declared that the
statements therein contained are true and correct.

Witness my hand and official seal, this 31st day of October,

1991.

My Commission Expires*

Karen L Gackfc Notary Public
Dace County. State of Horfda
ty C&iisiw Exp-is Dst 4. 1S93

Karen J. deckle /V • . ^ .

Notary Public, State of- Florid^ i’\^\

\ -v

George Miller

John Millei

D-California. 7th District
Began Service: 1975

2228 Rayburn House
Office Building
Washington, DC 20515-0507

(202) 225-2095

BIOGRAPHICAL Born: 5/17/45 • Home: Martinez
• Educ.: B.A., San Francisco State Col.; J.D., U. of Cal.
(Davis) • Prof.: Attorney • ReL: Catholic

KEY STAFF AIDES

Name/Position Legislative Responsibility

Name/Position L

John Lawrence

Bruce Agnew

Admin. Asst./ -

Chf. of Staff

Legis. Dir.

Abby Danicil

Daniel Weiss

Communications

Press Secy.

JoAnn Johnson

Diane Shust Education and Labor Commit-

Exec. Asst.

Legis. Aide/ tee

(Appts.)

Counsel

Charles Broches V

Sylvia Arthur

Legis. Dir. F:

Pcrs. Secy.

(Appts.)

COMMITTEE ASSIGNMENTS
Education and Labor: Elementary, Secondary, and Vocational
Education • Labor-Management Relations • Postsecondary Edu-
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Interior and Insular Affairs: Water. Power and OfFshore En-
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Children, Youth, and Families (Select), Chairman • No
task forces at press time

OTHER POSITIONS

Majority Whip At Large • Democratic Study Group • Environ-
mental and Energy Study Conference • Arms Control and For-
eign Policy Caucus • Congressional Caucus for Women's Issues
• The Congressional Military Reform Caucus • U.S.-Mexico In-
terparliamentary Group, Delegate

DISTRICT OFFICES
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Pleasant Hill, CA 94523 . (415) 687-3260

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Antioch, CA 94509 (415) 778-3777

• Educ.: B.A., Buckneii U
Attorney; Radio/TV Com

KEY STAFF AIDES

Andrew Johnson
Legis. Asst.

Sam Kaplan

Lesis. Asst.

Mike Sommerfeld
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fai

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Caseworker

COMMITTEE ASSIGNS
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tions • International Economi

Merchant Marine and Fisi
servation and the Environme:

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Force • Congressional Caucus
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and Energy Study Conference
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Committee on Interior and Insular Affairs

1324 Longworth House Office Building, Washington, DC 20515-6201 (202) 225-2761

Jurisdiction: (1) Forest reserves and national parks created from the public domain;

(2) Forfeiture of land grants and alien ownership, including alien ownership of
mineral lands; (3) Geological Survey; (4) Interstate compacts relating to apportion-
ment of waters for irrigation purposes; (5) Irrigation and reclamation, including
water supply for reclamation projects, and easements of public lands for irrigation
projects, and acquisition of private lands when necessary to complete irrigation
projects; (6) Measures relating to the care and management of Indians, including
the care and allotment of Indian lands and general and special measures relating
to claims which are paid out of Indian funds; (7) Measures relating generally to
the insular possessions of the United States, except those affecting the revenue
and appropriations; (8) Military parks and battlefields; national cemeteries admin-
istered by the Secretary of the Interior and parks within the District of Columbia;

(9) Mineral land laws and claims and entries thereunder; (10) Mineral resources of
the public lands; (11) Mining interests generally; (12) Mining schools and experi-
mental stations; (13) Petroleum conservation on the public lands and conservation
of the radium supply in the United States; (14) Preservation of historic ruins and
objects of interest on the public domain; (15) Public lands generally, including en-
' try, easements, and grazing thereon; (16) Relations of the United States with the

Indians and the Indian tribes; (17) Regulation of the domestic nuclear energy in-
dustry, including regulation of research and development reactors and nuclear
regulatory research. In addition to its legislative jurisdiction under the preceding
provisions of this paragraph (and its general oversight function under clause
2(b)(1) of House Rule X), the committee shall have the special oversight functions
provided for in clause 3(e) with respect to all programs affecting Indians and non-
military nuclear energy and research and development, including the disposal of
nuclear waste.

Ratio: 23/14.*

! MAJORITY MEMBERS

Morris K. Udall, Ariz*
Chairman

George Miller, Calif.

• Philip R. Sharp, Ind.

. Edward J. Markey, Mass.

*; Austin J. Murphy, Pa.

Nick Joe Rahail II. W.Va.
Bruce F. Vento, Minn.

•. . Pat Williams, Mont.

• Beverly B. Byron, Md.

•Ron de Lugo, Virgin Islands
; Sam Gejdenson, Conn.

Peter H. Kostraayer, Pa.
Richard H. Lehman, Calif.

Bill Richardson, N.M.

George (Buddy) Darden, Ga.
Peter J. Visclosky, Ind.

•Jaime B. Fuster, P.R.

Mel Levine, Calif.

James McClure Clarke, N.C
Wayne Owens, Utah
John Lewis, Ga.

Ben Nighthorse Campbell, Colo.
Peter A. DeFazio, Ore.

*Eni F.H. Faleomavaega, Amer.
Samoa

Jim McDermott, Wash.

Tim Johnson, S.D.

MINORITY MEMBERS

Don Young, Alaska,

Ranking Minority Member
Robert J. Lagomarsino, Calif.
Ron Marlenee, Mont
Larry E Craig. Idaho
Denny Smith, Ore.

James V. Hansen, Utah
Barbara Vucanovich, Nev.
•Ben Blaz, Guam
John J. Rhodes III, Ariz.
Elton Gallegly, Calif.

Stan Parris, Va.

Robert F. (Bob) Smith, Ore.
Jim Lightfoof Iowa
Craig Thomas, Wyo.

John J. Duncan, Jr., Tenn.

'Ratios do not include Resident Commissioner or Delegates.

(omtmmd at Mtt ptft)

Sonne 1990

Subcommittees of the Interior and Insular Affairs Committee

Note The Chairman and Ranking Minority Member are ex officio non-voting members of
all subcommittees of which they are not regular members.

ENERGY AND THE ENVIRONMENT
1327 Longworth House Office Building
Washington, DC 20515

(202) 225-8331

Jurisdiction: (1) Recommendations with respect to laws and
programs under the jurisdiction of the committee made by
the Council on Environmental Quality in its annual Envi-
ronmental Quality Report to the Congress; (2) Selected mat-
ters and proposals, as referred by the Chairman, involving
the environmental impacts of any laws or programs under
the jurisdiction of the committee; (3) Regulation of the
domestic nuclear energy industry, including regulation of re-
search and development of reactors and nuclear regulatory
research and special oversight functions with respect to non-
military nuclear energy and research and development, in-
cluding the disposal of nuclear waste; (4) Petroleum conser-
vation on the public and other Federal lands and conserva-
tion of the uranium supply in the United States; (5) Legisla-
tion concerning the transportation of natural gas from or
within Alaska or concerning the disposition of oil transport-
ed by the Trans-Alaska oil pipeline; (6) Forestry and forest
management issues in Alaska.

MAJORITY MEMBERS
Morris K. Udall,
Chairman
George Miller i
Philip R. Sharp '
Edward J. Markey
Austin J. Murphy
Bruce F. Vento •

Sam Gejdenson
Bill Richardson -
George (Buddy) Darden
James McClure Clarke

MINORITY MEMBERS
Janies V. Hansen,
Ranking
Denny Smith
Barbara Vucanovich
Ben BIaz

John J. Rhodes III
Sun Parris
Tim Lightfoot

KEY STAFF AI0ES
Majority ;

Counsel • L Sam Fowler

StafT Counsel Richard Mckee

Clerk Elizabeth McMillan

Minority

Counsel James G Barker 226-2311

WATER, POWER AND OFFSHORE ENERGY RESOURCES
. / 1522 Longworth House Office Building

v Washington, DC 20515

(202) 225-6042

Jurisdiction: (1) Irrigation and reclamation projects and oth-
er water resources development programs, including policies
and procedures relating thereto; (2) Compacts relating to the
use and apportionment of intersute waters; (3) Water rights
and water-related programs of the Geological Survey; (4) Sa-
line water research and development program and water re-
sources research program; (5) Water resources planning con-
ducted pursuant to the Water Resources Planning Act;

(6) Programs involving major interbasin movement of water
or power; (7) Measures and matters relating to public lands
in Alaska, except those within the jurisdiction of the Sub-
committees on Energy and Environment and National Parks
and Public Lands.

MINORITY MEMBERS
Denny Smith,

Ranking
Don Young
Ron Marlenee
Larry E. Craig
James V. Hansen
John J. Rhodes III
Robert F. (Bob) Smith
Ben Blaz
Craig Thomas

MAJORITY MEMBERS
George Miller,

Ql/ pmtff

Morris K. UdaU
Philip R. Sharp
Edward J. Markey
Beverly B. Byron
Sam Gejdenson
Peter H. Kostmayer
Richard H. Lehman
Mel Levine
Wayne Owens
Ben Nighthorse Campbell
Peter A. DeFazio
Jim McDermott
Tim Johnson

KEY STAFF AIDES

Majority

Staff* Director Daniel Beard

Counsel Jeffrey P. Petrich

Professional Staff* Members Dan Adamson

Charlene Dougherty
Steve Lanich

Clerk Sharon Kirby

Minority

Consultant Valerie Stackhouse 226-23 1 1

) Congressional Yellow Book

rJETIWEJ

A Big Squeeze ou Defense
May Not Deflate the Deficit

SUMMARY: Y/fth warming Soviet relations has come talk In Washington
of a “peace dividend” — a defense spending reduction. The battle in
Congress will focus not only on how deep that cut should be but also
on whether It should be spent or used to cut the deficit Though some
will fight for a tax cut others will want to use the savings elsewhere.

^ith pieces of the Berlin Wall sell-
ing as memento mori in tony
department stores and commu-
nist parties across Eastern Europe abdicat-
ing their thrones, a bidding war has broken
out in Washington over how much to cut
defense spending. In fact, two battles are
already being fought on Capitol Hill over
the potential “peace dividend”: How big

Frank wants better social programs.. .

will it be? And how should it be spent?

The fust banle — over the depth of the
cuts — broke out in congressional hearings
in mid-December. Robert S. McNainara,
the former defense secretary, argued before
the Senate Budget Committee that defense
spending could be reduced to S265 billion
by 1994, $55 billion less than the Pen-
tagon's previous projection for that year.
McNamara assured the committee that the
Soviet threat was diminished, arguing that
Mikhail Gorbachev's policies would be
pursued in the Soviet Union whether led by
Gorbachev or a successor. McNamara said
that given the persistence of communist
reforms, "in the face of . . . economic and.
social problems, it would be folly to spend
more than we need for defense.”

McNamara was joined by Lawrence i.
Korb, an assistant defense secretary in the
fust term of the Reagan administration,
who, with an eye on the budget deficit,
said, ‘There is no doubt that the combina-
tion of Gramm-Rudman -Gorbachev can
and should drive the level of defense spend-
ing down by about 25 percent” within five
years. Korb said the defense budget could
be slashed lo $225 billion by 1995. And
Defense Secretary Dick Cheney, at the re-
quest of President Bush, is seeking ways to
roluce the growth of defense spending by
$180 billion over the next four years.

Jim Sasser, chairman of the committee,
agreed that defense should be cut. though
the Tennessee Democrat warned it would
be unwise “to set out on mindless cutting
without an overall strategy.”

But Sen. Pete V. Domenici objected that
“until we see with greater certainty how the
current turmoil in the communist world
plays out, we simply have no way to project
great defense savings next year or five years,
from now.” The New Mexico Republican
chastened those hopeful of large savings:
"Those who are looking for an instant pot
of gold at the end of the defense rainbow
l are going to be disappointed.'*
i* Neither Sasser nor Domenici need
- worry, however, that Congress will cut de-
fense pell-mell. Cuts in troops, bases and
' defense production could cost some areas
jobs and income. Skirmishes over which
states will lose part of the economic sub-
sidy that comes with defense spending are
sure to prolong the defense reduction bat-
tle. Such politicking is a traditional feature
of the defense budgeting process on Capitol
Hill. For example, when Cheney attempted
this summer to trim spending by canceling
production of the V-22 Osprey tilt-rotor
plane and ending production of the Grum-
man F-14D, the corporations involved
launched advertising campaigns touting the
systems, and members concerned that con-
sumer isy^uld be put out of work appro-
priated money' tq keep the projects alive.
Disputes like these may become increas-
ingly cqmrnpn. ai the budget shrinks.
Reductions in domestic troop levels are

Thomas Scully, the Office of Manage
and Budget's assistant director for leg
tive affairs: "People don’t want to rcac
the plant down the street was closed i
interest of deficit reduction. People <
get elected that way.” »

Such political incentives make it
likely that members of Congress, x
they finally get down to line items, wii
as much as they now suggest while
cussing the defense budget as a whole,
this has not postponed the second ban:
over how to spend the savings. Eve
defense reductions are small — most
pect there will be no reductions in the d

f s Vrt*pVV T .» . r

y&ti,

. while Gramm wants to cut taxes.

amount spent but merely that increases v
not keep pace with inflation — Congr
has already begun to talk of a windfall
revenues for new social programs or
deficit reduction. And not just Congie:
Michael Boskin, chief economic advjscr
President Bush, complained not long at
that people who recently were “arguir
about the deficit and saying this is o
major economic problem” have alreai
planned how to spend any savings “sever
times over." i

Scully says the money may be “ima
ined to be there. The peace dividend —
decrease of an increase of $4 billion or i

billion — by the end of the year will proc
ably be magnified into 5100 billion th
also notoriously difficult to achieve. Notes , people will want to use.” He doubts Co.

INSIGHT / JANUARY X. 10

There hasn't been a peace dividend “because we're
spending so much on other programs. There are too
many other places people want to spend it.”

gress will want to use it solely to cut the
deficit and avert tax increases: “They will
say that if we take ail this peace dividend
arid have just a slight tax increase, we can
afford to fund everything, if we did nothing
but put (the peace dividend) toward deficit
reduction we’d still have a hell of a long
way to go to meet the Gramm-Rudman
targets.” *

But no one is predicting that all. or even
most, of whatever savings are squeezed out
of the defense budget will be applied to the
deficit (S 152.1 billion in fiscal 1989). Dick
Doyle, a senior defense analyst on the Sen-
ate Budget Committee, notes that in real
terms the defense budget has been shrink-
ing steadily for five years, >rt revenue freed
by the cuts has not found its way to deficit
reduction. "We’ve been on our own little
perestroika here for five years running, and
I don’t know about you, but I’ve never
noticed a peace dividend,” he says. There
has not been a peace dividend "because
we’re spending so much money on all these
other programs. . . . There are just too
many other places people want to spend it.”

Even if there are substantial cuts in de-
fense spending, Herbert Stein, a fellow
with the American Enterprise Institute,
says they will do little to ease budget con-
straints: “We have the continuing problem
of how we allocate the national output, and
if we have a Hole more to use for nonde-
fense purposes — and it’s only a little — it
doesn’t change the basic problem.”

’ One plan to spend defense savings on
social programs has already been pro-
posed, by Democratic Reps. Barney Frank
of Massachusetts and George Miller of
California. In a letter to colleagues, Frank
wrote that the United States has been "sub-
stantially underfunding some vital categor-
ies of domestic spending, including health '
care, housing, education, the environment
and the infrastructure.” He concluded that
“the best way of increasing spending on
these important domestic programs is to cut
the military budget in a manner which is
consistent with the changing international ’
situation and to dedicate the money saved
in this way to domestic spending and fur-
ther deficit reduction.”

Under the proposal, S18 billion would
be cut from defense in 1991, S 15 billion of
it going to social programs. Of the $90
billion the proposal would strip from de-
fense over three years, less than S40 billion
would be used to reduce the deficit.

Frank and Miller's legislation is consis-
tent with a shift in thinking by liberal econ-
omists over the past year, heralded in a
manifesto the Economic Policy Institute

ran last summer as advertisements in The
New Republic and Roll Call, a biweekly
newspaper on Congress. De-emphasizing
the size of the federal deficit, they now
argue the need for government investment
in what is termed the economic infra-
structure — roads, bridges, an educa t ed
population and the like.

Robert Reich, a lecturer at Harvard’s
Kennedy School of Government and one
of the economists who signed the ad, says
a deficit is not so bad if it is put to the right
use. “Whether you are talking about a fam-
ily or a nation or an individual, the princi-
ple is the same,” he argues. "Going into
debt by investing in your future capacities
to produce wealth is never a problem. Go-
ing into debt to increase present consump-
tion is an enormous problem.” The return

structure is like a drunk spending
money on whiskey and then blarm
employer that he can’t feed his ch;
We’ve got plenty of money in the b
we’re just spending it on the wrong th

Gramm says he will fight to has
defense savings used to reduce the b
deficit and taxes. Though "there wi
tainly be those in government whe
want to take the opportunity to ini:
massive new spending program,” he
“the principal benefits of any peace
dend should go to the people who w
Cold Wan the long-suffering Ami
taxpayers.”

Gramm’s argument for a peace div
tax cut in some ways resembles R
argument for infrastructure investmer
main difference being that Gramm :

U.S. planes over Europe, where Am erica’s military presence may soon be reduced

productive investment comes about
when the federal government directs spe
ing but when the private sector gets to k
a larger share of the gross national prod
"We can speed the transition of the ec
omy by allowing working people to k
more of what they earn to build new horr
new farms, new factories — to gene:
new economic growth”

Though he is not overly hopeful t
lower defense spending will translate L
a tax cut. Gramm hopes that the growth
social spending can be restrained,
need to I cam from the lessons of East*
Europe,” he says. "If more government v
the answer, the Berlin Wail would ha
been tom down from our side."

•• • *. . : ’ ’• -.-UVI — Eric FeL

on infrastructure investments, the argument
goes, will pay for the debt. * • •• ■

Sen. Phil Gramm, the Tfcxas Republican
who cowrote the Gramm-Rudman deficit
reduction law, does not disagree with
Reich’s premise that too little of govern-
ment money is spent on investment, though
he does object to the idea that the govern-
ment should run a deficit to fund invest-
ment “Our government, in the money that
it docs spend, spends too much on con-
sumption and not enough on investment,”
says Gramm. "Our infrastructure problems
do not represent a problem in available
resources, they represent a problem in
terms of the misuse of those resources, lo
blame our budget problems for not having
enough money to build economic infra >

INSIGHT / JANUARY S. 19°"

* The difficulty in dealing with the occupational
disease issue has been compounded by a maze of diverse
approaches which have raised many questions and offered
few solutions. Is asbestos a unique problem, or should the
whole issue of occupational disease be confronted?

No-Man’s Land
fcfr Insurers

BY JOHN H. LAFAYETTE

A sbestos may

as a menac-
ing iceberg
threatening

workers' compensation system.. And,
- like most icebergs, it is all the more
menacing since further perils— the
unknown implications of ocher occupa-
tional diseases— lurk unmeasured be-
neath the surface. While insurance
companies, manufacturers, legislators
and victims of occupational disease try
to navigate the complex issues raised
by this pervasive problem, some possi-
ble solutions have emerged.

Crum and Forster released last
June its report of recommendations on
how the state workers' compensation
systems could be revamped to handle
the occupational disease problem. Its
approach immediately gained the sup-
port of most of the insurance industry.
Meanwhile, a bill pending in Congress

proposes a federal system to handle oc-
cupational disease claims, essentially
negating the Crum and Forster initia-
tive.

The difficulty in dealing with the
occupational disease issue has been
compounded by a mate of diverse ap-
proaches which have raised many ques-'
tions and offered few solutions, is the
problem of occupational disease best
handled through reform of the prod-
uct liability or the workers' compensa-
tion systems! Is asbestos a unique prob-
lem warranting a special program, or
should the whole issue of occupational
disease be confronted! Can occupa-
tional disease be handled better on the
federal or state level!

The variety of alternatives being
proposed at both the federal and state
levels is an indication of the broad and
expanding spectrum of concern over
the implications of liability for diseases
with’ long latency periods. Suggestions •
fpr resolving the problem include de-
veloping an expanded occupational dis-
ease coverage within a federal workers'

compensation pool at cither the fedcr:
or state level. The National Associ;
tion of Insurance Commissioners a[
pointed a group to study occupation
disease, as did the International Ass-
ciation of Industrial Accident Boa:
Commissioners.

Also working on resolving a m
jor portion of this issue is the Asbest
Claims Council, a consortium of m
jor insurers with asbestos exposu?
The Council has been working at t:
ing to resolve the dispute. between
surers and their policyholders conce:
ing the question of coverage. It recc:

’ ly created a task force to design a
establish a central claims handli
facility which would attempt to resc
future asbestos coverage claims agai
manufacturers, suppliers and their
surers. The idea is to encourage the
ing of claims as opposed to the ft'
of lawsuits.

Compensation would be trigge
when the asbestos-related disease
diagnosed; thus providing an
mediate benefit to the claimant.

»be comoanies woulc

^l«^rM»s5a5^trfni«^jll^Ot»^»^vv5

Vcrm<f|^Kr

F2P41 e?QC7

VAf AYETTE— FROM PAGE 21
on the inability of lh£ core liability
system to handle a large number of
such claims.

The number as well as the com-
plexity of these claims will increase,
according to the Crum and Forster
report. Contributing factors include an
increase in the average age of the work-
ing population, the unknown effect of
technological developments and the
long latency period of some diseases.

The .report offers a series of statu-
tory. and administrative proposals
dcsigncd.ao’ alter the state workers*
compensation systems to ensure that
they can adapt to whatever scenarios
i he ftjturc may hold and at the same
time "balance the right of an employee
to prompt, fair and adequate compen-
sation withe he ability of the employer
to pay." ' '

. LOOKS AT- ALTERNATIVES
• The report is “not a rigid docu*
ment,” Robert J. Stillivan, vice presi-
dent of government affairs fur Cfuin
Forster Corp., told Best's. “It Icxiks at
alternatives to the current workers*
compensation systcms...at least' those
which are acceptably to us land the in-
surance, industry)," he said. .“The
report fills the gap of bringing bvery*
one up-to-date” on what is the current
state of affairs in workers* compensa-
tion.

Crum and Forkter has given the re-
port "nretty widespread exposure.** Mr.
Sullivan* sa?d. An exposure draft was
critiqued ir. March by a group of work-
ers’ compensation specialists; it was fea-
tured at ‘the Seventh Annual National
Symposium on Workers’ Compensa-
tion in Orono.-Mainc, in July, and was
presented to the House Subcommittee <
on Labor Standards as well as read in-
to the Congressional Record,

* The report concludes that adop-
tion of its 12 recommendations would
"assure the responsiveness of the state
workers' compensation systems." De-
spite these assurances and ‘a plea by
Leslie Check 111, vice president of
federal affairs for Crum and Forster,
before Rep. Miller's subcommittee that
they **stay...(thcir) legislative hand until
iris dear that the private sector can-
not resolve Us asbestos litigation prob-
lems and that the states cannot mod-
ernixe their occupational disease com-
pensation statutes,” proponents of a
federal system say they will push for
passage of the MiHer bill in this upcom-
ing legislative session.

exahlidt a federal program *u wnt|vn-
sate individuals or dcfx’iulcnts for
death or disability resulting from oc-
cupational diseases^ Support for Rep.
Miller's approach stems in part from
the lx*lief, as expressed in a legal
memorandum prepared and distrib-
uted hy the Labor Law Advisory Com-

areas of the
, report may create
- some controversy.

miltec of the National Assentation ol
Manufacturers, that “the insurant c in-
tlusiry may lx- unable to lx*ar the bur-
den of. the |M»tentinl risks alreadv
sus|xx tetl to exist and lx*gi lining to lx*
litigated. “ Furthermore, according to
the memorandum. with the expansion
of tort liability, insurability of sutli
risks is txxoming economically infeasi-
’ blc for underwriters.

Rep. Miller’s bill is designed to pro-
vide an exclusive remedy to tx’cupa-
tional disease victims who have not
•already filed claims for compensation.
Although originally created to handle
asbestos claims, H.R. 3175 contains a
triggering mechanism hy which the*
Secretary of Lahor can expand its cov-
erage to other types of tx'cupational
disease if incidence of a disease exceeds
incidence in the population at large by
30%. ‘A Congressional veto would he
necessary to rescind the Secretary of
Labor's decision.

. The hill would set eligibility criteria
and establish irrebuttable presump-
tions in certain cases if an employee
-^could furnish proof of exposure to
asbestos. It also would establish a com-
pensation pool; limitations on liabili-
ty would apply only if an employer or
toxic substances marketer participated
in the pool. The pool would collect
assessments set by the Secretary of
• Labor using a complex formula, and
pay all claims. The Lahor Secretary
also would decide which employers or
toxic substances marketer should par-
ticipate in the pool; some could par-
ticipate voluntarily. Tool participants
could obtain insurance or they could

the p**oJ. Emplovi*r/iiiMirvr/|x»ol
*or subrogation in third party
would lx* banned.

“We didn't get everyone.. .ti
brace the (Crum and Forster) re
metulations," Mr. Sullivan *.ud.
major criticism was that the r
deals only with the workers’ pm
sat ion system and d»x*s not add re
tort liability system. But *he r
points out. “A great deal of
crituism is an attempt to recast
party liability problems as wo.
conqx-nsation problems. These
cisim fail to differentiate accurate
tween the function of the tort It;
system— 1«» allocate res|x»nsi
among tortfeasors — and the funct
the workers' com|X*nsation syste
provide no-fault coin|X*tisat ion
jurecJ woi kers."

Few aslxMos-related clam,
filed under workers’ i« nnjvus.it io
the most part^ these claims an
under the tort liability system,
is mm It more generous titan wi
komjvttsation. When claims rela
aslx*stos arc filed under workers
ix'iisatioit, claimants do receive
tits. ( ’ons*i|uentlv. maiiv *av the
lent is not with the workers' m
sat ion system but with the li
system.

Rep. Miller’s bill acknow
that the problem stems from a
down in lxuh systems, its prop*
say. The Miller bill tries to rente
problem by designing a complete
workers' compensation system
federal level engineered tit deal w
cupnt tonal disease and integrate
. the tort liability system,
acknowledging that Crum and ’
did a gixxJ job of uncovering wl
wrong with the state workers’ cr
sat ion systems, proponents
federalized system argue it does
for any blueprint for a solutic
Miller hill docs hy spelling
comprehensive solution, they

“We oppose the Miller bil:
Sullivan said. It is not a ques:
whether the Miller bill is better c
comprehensive than the Cru:
Forster report, in his view. “Sup'
the Miller bill is merely derive
the perception that the states c
it," he said, adding that the bi!
supported on its merits.

HIGH C OST OF LITIGAT IC

Rep. Miller, however, poi
recent study by the Rand
"Costs of Asbestos Litigant

To Subminimum Wage

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revive ‘h* perennial pro|*osal •.( a
>**u*h Hiihtiiinimnm wage. .is a
rvnrr* White ll'Hise trial hali<»«rt
uiggi-its he might. prosp**«ts lor
favorable action m i ongress
Wl*||d tie slim

Legislative strategists on
Capitol Kill believe a
suhmimmum wage hill could net
to IN* Senate ffrmr tjnt proUiblv
would fair \ trtually no chance of
aiTt’pt.im ** in ihe House

|ti'ni<sraN now more ftrmiv in
n*Urol of the House probably
would rep-ct any suggestion that
a suhmimmum. limit«*«| term «*n
try level-rate for youths would ex
pand ji*t>s at a time when
unemployment for the l* In
13-year age group is alm*»st 25 per
cent It has been above the 20 per
ifnt market shut November
i»l

On i apitol Mill, rumors abound
about the suhmimmum wage
rebirth One. consider ed far
fetched. is that Reagan will ask
Coogrrvv to consider a youth dif-
ferential as low as half of the
statutory 1) .15 hourly figure ap-
plicable to^ll others

other figures, equally unaccep-
table both to organized lalxir and
its supporters in Congress, range

from 75 to RS j*t cent of the
statutory wage floor i 1

As was tin* case last year, any
youth suhmimmum wage is err
tarn to lx» spiked by the House
lalmr standards subcorn mitt it.
headed by Kep Ceurge Miller

0. Calif » Miller, a strong labor
partisan who often tingles with
business, views a subminimum
wage as a ploy to undercut the
higher wage floor He agrees with
the A FI. CIO that it would only
result in displacing older, ex
penenccd workers

I -ist year, accordingly, the
House sulxommitb-v refusal to
have any part of subminimum
projHivaLs R held no hearings In-
dustry can look for a repeat of
that performance, although there
ls always a chance that the sub-
committee might want to formal-
ly reject a subminimum-wage
bill just to underline its
sentiments

The atmosphere is somewhat
cheerier for proponents on the
Senate side where the Labor and
Human Resources Committee
last year held several hearings
but took no action.

Three key submimmum-wage
hills surfaced in the Senate last
session Sen Charles Percy (II.,
111.) proposed that the; sub-
minimum wage be fixed at 85 per
cent of the minimum wage level
Sen Omn Hatch <K.. Utahi.
chairman of the Senate Labor
Committee, offered a bill to set
the level at 75 per cent. .

Both felt any subminimum
wage should be closed rather
than open-ended To avoid
employer abuse, this would limit
the .subpay period, perhaps to six
months Coder their proposals, if
employers were found to be hir-
ing young workers at the sub-
'minimum wage and then dropp-
ing them at the end of six months,
they could be assessed the full
prevailing wage retroactively
‘Another safeguard nroposal
would limit subminimum hiring
to Six nr eight workers per com-
pany . hut this measure wn*«M

.Sen I>on Sickles <R . Ok
chairman of a Senate labor
committee, calk'd for climirui
the Wage Hour Act on
grounds that it resulted
unemployment ami thus '
counterproductive Sickles i« »
of the most conscrvali
memtxrrs of Hie Senate z
generally Lakes a hard line
labor issues His effectivene
however, has been minimal.

Secretary of I-ahor Kaymo
ihmovan reportedly now favorr
youth subminimum wage I-s
year, while extolling the virtu
of the proposal Donovan told tJ
Se nate Labor Committee that f
and the Administration weren
prepared to take a formal pos
lion for or against the sut
minimum wage. The subcommit
tee is pressing Donovan U
elaborate on his contention that z
lower minimum wage, however
limited, would expanc
employment.

Any subminimum-wage pro
posal this year would be pitched
to easing unemployment and
creating new job opportunities
. for manngal. unskilled workers
While labor lias said that the sub-
minimum wage would be a
bonanza for the retail fast food in-
dustry — and has tagged such
legislation as “the MacDonald
Bill’* — it is considered even
more appealing to many small in-
dependent businesses and super-
markets. MacDonald’s, in fact,
has taken a low profile on the sub-
minimum wage and avoided
testifying in its behalf.

A distinct handicap for any
youth subminimum wage is the
split-vote conclusion of the
Minimum Wage Study Commis-
sion, established by Congress,
that it wouhln t improve job pro-
spects for youth and would tend
to encourage employers to hump
older, experienced workers in the
interest of cutting labor costs

A further complicating factor
that gives pause to proponents is
the danger that proposing a sub-
mimmum w .*»«*» »••• J

t .l a Otntilu ; undul.i-
stoking lh«* firos »•! m-
.nflict, me Presbyterian
» Robert McAfee Broun
.mberof proposals that he
;round rulesfor fruitful tlia*

irtner. he wrote, must l>c*
ihe other is speaking in
. Each partner must strive
cr understanding of the .
>itinn and interpret it in the
rather than the worst,
ner must accept responsi-
umility and penitence, for
ir her own group has done to
;e division. Each partner .
brightly face the issues
onflict. v 7 ~ ' *

unds almost too elementary
ful — until one remembers
iied the current debates be-

•ralsand conservatives

>me with caricatures and
es. with attributions of un-
otives and suspicions of hid-
las. Discussions conducted
Brown's rules would be
rent.

:!d they end the combat?
sarily. After all. the conflict
oois in the contrasting re-
f believers to the challenges
rience, intellectual skepti-
political freedom pose for
I sources of religious au-

rcwTwrchrifany;ofihese

nponents of modernity can
;t be. absorbed into a viable
aith?

;ith a question like that, the
iffcrences. as Dr. Brown
760. "may also mak e clear
eavages are mucKTJeepcr
artners to the dialogue had
i thought.” -

* advocates of dialogue be-
at least the denunciatory .
id psychic bloodletting
educed, that the remaining
tents would be focused on
.e points at issue and that in
s, each side would become
out the strengths and -
*5 of its o w n-convictions.

j blimu »«wo uiifn* fn*m

j Mr. Hn:*i-‘wood in* ; ho::r:; after the ac-
cident showed that the alcohol level
was 0.081 percent in his blood and 0.094
percent in his urine. Those readings
were under the Alaska state limit of
0.10 for driving a car or truck, but
above the Federal limit of 0.04 for oper-
ating a commercial vessel.

The toxicologist. Michael A. Peat of
Sacramento, Calif., said alcohol read-

Coast Guard Assailed
On Oil Spill Readiness

WASHINGTON, Feb. 16 (AP) - A
California Congressman has accused
the Coast Guard of overstating its
readiness to deal with oil spills like the
one that fouled the Pacific Coast south
of Los Angeles last week.

The lawmaker. Representative
George Miller, a Democrat, charged
that the head of the Coast Guard, Adm.
Paul A. Yost, assured him last August
that his service was capable of clean-
ing up far more than it actually did in
the recent spill.

Admiral Yost denied the allegation in
an interview on Thursday, saying he
was satisfied with the cleanup. "I’m
delighted with the cleanup," the admi-
ral said: ‘Til stand by the cleanup.'*- • «|

Mr. Miller said Admiral Yost had
told him in a letter that under ideal
conditions, 161,500 barrels of oil would
have been recovered within 72 hours of
a spill off Southern California.

l!eF~sat<Mhe--eieamip-oM
Feb. - 7~spill~off~Humington-Beach,
CaliL, although much smaller than the
Exxon Valdez spill in Alaska last
March, recovered only 2,762 barrels
four days later, less than 2 percent of
what the Coast Guard had estimated it
could recover.

The American Trader spilled 400,000
gallons, or about 9,500 barrels, of crude
oil as it tried to moor about two miles
off the California coast. The Exxon Val-
dez spilled nearly 11 million gallons of
crude when it went aground.

•• suit it Might u: timinusV

*11 was very intense and very ohvi-i
ous,' Mr. DeLozier said. “It was myj
impression he was attempting to cover i
it up by putting his hand over his mouth
and also by drinking coffee."

On cross-examination, Mr. DeLozier
acknowledged that he himself had been
drinking the night before at the same i
Valdez bar where Mr. Hazelwood isi
said to have been drinking earlier in
the day.

The witness said he had only two
light beers, but conceded that someone
talking to him might have smelled beer
on his breath.

:ia/
imv
wall
oi he
zier
seer
sign
of hi
TT
late:
a bo:
N«
test:
the •
pear
ship

Jerelle Kraus Marries

Jerelle R. Kraus, the art director of
The Living Section of The New York
Times, and Horacio F. Cardo, a free-
lance illustrator, were married yes-
terday in a civil ceremony at City
Hall in New York. The bride is a
daughter of Joyce Kraus of Berkeley.
Calif., and the late Dr. Otto Kraus.
Her husband is the son of Mrs. Juan
Cardo of Temperley, Argentina, and
the late Mr. Cardo.

. Mrs. Cardo received a bachelor's
degree and an M.A. in art from the
University of California at Berkeley.
She was a Fulbright Scholar in Mu-

nic
dip
de*
wa
ph>
Lor
Kr:
in L

riag
of 1
lish
reti
Roc

Faith McGillicuddy VI

^ Fait h^ Bur tis ^cGH ll cud dy andSte - utiv^
yesterday- at-ihe— Roman— Catholic Han

Church of the Resurrection in Rye,
N.Y., by Msgr. Donald J. Pryor.

Mrs. Benoit is a daughter of Mr.
and Mrs. John F. McGillicuddy of
Rye. Her husband is a son of Mr. and
Mrs. Arthur N. Benoit of Cos Cob,
Conn.

The bride, a graduate of Holy Cross
College and the New York School of
Interior Design, owns McGillicuddy
Interior Design in New York. Her
fatheris the chairman and'chief exec-*

Yori

TY
Schc
from
. and
elerr
tanv
retir
tor
equir
-in St

'Own~l ^ u ^ m inimum Youth Pay
vir ! Doesn’t Rate With Miller

in net loss for the
of 138.4 million in

I sewing 'products
jerating loss com-
s in the year-ago
t to SI 12.8 million

Tplus manufactur
>any to reduce the
PJ79 hy $10 million

'ducts division was
from its major
.! capacity But the
this division were
*.h. N.J . plant,
were also hit by the
) and Brazil,
ind chief executive,
the industrial sew*
ily because of the
i that began in isrr»
1 in 1082.

WASHINGTON »FNS» - An-
ticipated Administration support
for a youth subminimum wage is
drawing advance opposition from
Rep. George Miller D\- fall! ...
who heads a House labor subcom-
mittee with jurisdiction over the
Wage-Hour Act He predicts Con- .
: gress will give little attention to*
any such proposal.

1 Miller says a youth sub-
minimum wage would only "pu»h
j youngsters into the job market,
r while their parents stand in
» unemployment lines.**

.The Administration is expected
. to call for a cut in the $3.33 hourly
statutory minimum, perhaps to
$2.50 applicable exclusively to 17-
to 20-year-olds and for a limited
; period.

Miller, who took the lead to
* spotlight "sweatshop conditions"

i Katkin Named

iuville

way ton. Conn., arnew
that acquired the
•I for. athletic socks
■sico The bocks,
n men's, buys’ and
us s. range at retail
$3 to about $4 50

: To New Post
'■ At Brannam

i NEW YORK - Steve Katkin .-
• has been appointed to the* new
- position of vice-president and
merchandise manager for
men’s wear, children s wear
and domestics at J Brannam.

aid that shipments of
ks are expected to
irch.

the 41 -store off -price retail
•division of F W Woolworth.

He reports to lam Williams,
president of Brannam

will also market un- ' Katkin was most recently ;
mily. socks to depart- .senior vice-president, general
res. regional and.. C'hrvfrchandiso manager, with
nains and mass mer-fcJ ^Outlet Department Stores.

— — - It | Before that 1

in the apparel industry at a time
when the Labor Department
sought to ease restrictions on
homework, suggests caustically
that in offering a subminimum
wage, the President is "replacing
Reaganomics with Faginomics."
a reference to a character in
Charles Dickens' "Oliver Twist.**
The subcommittee chairman
estimates that for every
unemployed teenager there are
almost six idle adults.

* "If the Administration wants to
expand job opportunities.’* Miller
. adds, "I suggest Mr. Reagan and
Labor Secretary « Raymond i
Donovan look to the unemploy-
ment offices and the hinng halls,
not to the classrooms and
playgrounds.**

Stock Prices
Drown in Oil;
Dow Off 23

NEW YORK « FNS * - Stuck
.prices plunged Monday, led by
the oil companies. The Dow Jones
Industrials lost- 22.81 to 1.430.17.
The Dow was off more than 30
points at midday
The failure of the uPEC
meeting to reach agreement was
blamed for the market decline.
An average share lost ‘J1 conus on
the New York Stock ^xchange
and . 31 cents on the Amex.
Volume »n the' NYSE was
91.5oU.oiKi shares, and declining
issues overwhelmed gainers.
.I.U22 tn 162. On the Amex. volume
was 9.833.780. and losers

-i-i-nitm *170 to 73

e^oaiS971

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Rep. Miller discusses
occupational disease

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r industries throughout me world.

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A IlMaikMIkrpnrwMUk
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Ik* mu a* Ratal kw na a ta Yaw
fil l tik yrayl* l« lakiiRiir
AMMia inawauy *nk ikvir
Malta, wwk *k > «* wyllara. W#V*

T^TET 4a yaw UUaA Ika
i will ka al (kit wrkal*
MatvaR la Waaklaf*

rea l ut <f «*k« IRU*

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L#C*I Servtrrt kiM V*J‘

Miller's views

CvaiiKw* ftw l«

lei* of productivity md leu of
prefiu and Ion of »wlrn health
•nd welfare And. I think there * •
Creator undemanding that bom
panic* have te be in on in* rnofv
lion of the inuation

Q: ir employer* and laker
week ihU out, U (Kero • need lee
Uaihlafta* te frt te vetoed T
A Well, it may be a qurinon of
feriliuuni jthe afreement in aomc
roae* it may be ui treatment, or n
may be a whole heal el areaa

Q: Are you play te introduce
any occupational dlacaae bill*
IhU area lee!

A Ye* We've been <» or king on
legislation baaed upon our ripori-
rnce with Longshore
Q: Hew will your new bill* re-
aemble the Laat enrl

A I think it will be along the
aame line* (as H R 3I7JI. but what '

all group
antal plans are
sginningto
ok alike...

m-s

tverthe Delta alienee!

.ystem has so many built-in checks and balances*

""Bion people covered. Oeltt i* the
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* oldest

first group dyntal care programs in
hen we pioneered a system ol quai-
“anrTdbsi 'containment that is sbl
/ any other plan.

-*m has so many built-in checks and

Jentists file their fees with us and
y‘N charge no more, in cases where
ntal work is required, they submit
ins in advance to determm« how
gram win cover and how much the
ve to pay.

Patients are only responsible for applicable co-
payments ana deductibles.

Everything is aO spelled out. No surprises, no com-
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For a tree copy ol Oelta's 10-poini Dental Plan
Comparison Chart, call our National Accounts
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n where you stand with a
:nta! Plan. • ^

rrruinly into legislation wiih re-
•|mrt to the no* i tbit •arioui pjnm
r*n anticipate | think th*i • what
you o»« 10 thv prople vti are
|om( t« hr paving ut« bill*

Q Will you/ kilt )u*l deal with
ssUtako*. or will || Uk« lb (hr
whol* gamut o f occupational
dUrtatl

A Writ. »• like tu think if wr
c*n provide * succvwlui lytum lor
dealing with one ol ihr larger
known problems that of aibrvio*
that that confidence would inapt r»
other* to join that system rrlaitd to
miter tour* or inapirt legislation in
Ur aim g with mot* problem*,
whir hever would br nrrnurr
Q: It aouad* la me Ilk* II * Just
rolbg l« irr* la aa a* be* to*. But.
you did mention other male*
(planing eft of It.

A: I like to solve problems. I'm
JW interested in rerunning prob-
Irma every five or 10 year* The
question is. do you went Id set in
motion a procedure so that when
thrw kind* of problems arise in th*
future we ran drat with them on a
timely basis, before they re rnae*.
before the big lirvan/iaJ obligations
and the in term on the money be-
come to big that you have to tun
redriigning or itart designing a
whole new system from scratch.
And clearly it ha* to have a great
deal ol balance to that it deem t be-
come a club to use by one entity
with respect to another
Q: »h»u do yuu think that
your package will be ready?

A I hope early in the tnaion
Q Are yon going id be the key

A That a my intent

Q: la the Issue of (be federal
government'! aabeatoo liability
going to move off center in the
nan twn years?

A- Well' to the aame degree that
the pnvate sector wanta tome cer-
tainly aa to what their eapoaure it
going to be (The parue* in the as-
bestos situation! have to give the
federal government tome idea ol
what they're talking about in terms,
of federal obligation To date,
there i been an open-ended oblif*.
non mats absolutely unacceptable
to me. to the Congress and to the
administration

Q: Your proposal cm los • fed-
eral system that will lake a lot
of the responsibility tod th* com
trot away from the s u Lea. Arc

really dealing with tha occupa-

A- Yes I think you continue to
sec state laws or itaie compensation
, program* riddled with loophole e*-
emptiona that deny occupationally
diseased workers (roqt'adequaie
benefits, from umely consideration
of those benefits State* are making
changes in their law*, but as of now
it's a patch Work system that it in-
adequate to addreaa the needs of
•spewed worker*.

Q: You have often said there la
si timely consideration for oc-
cupational discos* dolma. But
what about people with regular
claims? Do you make the aame
argument about their claims not
being handled quickly?

A: Right. But. even more so for
OD claims. They're more likely to
be contested. They're more likely
to have thresholds and limitations
placed against their consideration,
preventing their filing
Q: If all the states eltaa up
their work comp acta quickly, do
you think the federal govern-
ment will back nff. aa It has In
the past after It’s (bopoacd
heavy-duty federal reform?

A: I think it would certainly
lower the threshold in terms of the
for* federal legislation.

(*!*»?!« that's «;kti t--- •

: Concepts

‘'JDENT...
RAGE or
f FILIATION

<-6*^ I6HI *35 0386

IUI VVUI rx^jiuw w —

By KATMRYN J. McIWTYRE

white sulphur springs

w. Va — Haeently ci**cm*I amend-
menu 10 the Longthncemeti » *
Harbor Worker* C«m|wn»»n»n
Ail *erv* a* a model lur frlormnig

mi ntm^nniiwn • J — —

cop*. tonal diteaa* claim*. runietula
• runi|(iii* M in who lavor* ■ leil*
rral »y»i*m ol compenaaung »«•
pattonal diMiM victims V*

-Thtt legislation «** lh# prwJuCl
n( lour year* vl *e»y ioa|h-»"d
ihn »l»«yi very ami-
title- neyirtMtMMa,*

Hep Geurge Miller.

U-Calil . odd a joint
meeting ul lh* Na*
iHmel Aon u I Caau-
ally Dr Sorely A genu
and lh# National
Ann ul Caaoaliy it
Sorely Executive*

u--

Map. Millar. who ■* chairman ol
the liooaa Labor Standard* Sub-
rommiitee. »*l re-
t|awiiiM* lor the oc-
cupational di*e**e
amendment* to the
Longshore Art. ac-
cepted by employer*
beraota they ware
winning important
relornta in lha eel.
iwrh as a cap on in-
rraaia* in benelua.
elimination ol the non-worli re-
lated death brneln and a reding on
survivor* Urnelil*.

-The I mat priaiort w.m the *up-
|iurt ol the maritime and insurance
Industrie*, a* well a* laUir organ*-

A heslthy new feneration of medical
*? and patient-cart* facilities and profes-
sions has jpnown up around us during
the past decade. And Shanti, Mondial)
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Shanri Mora ban Wain Emsslos IL COiOl

Mr. Miner

ronlcrmr? commute* *ntl .both
mm ol Congre**.

‘Given ihu con*en*u*.' Mr.
Miller »*id. ”1 «wli*** «h* Long-
k twice Act provule* the Iwtil loC re-
examining the nwe ul occupational
dikraae cwniemilion 1 would hope
that we might look to ihu new law
a* a prototype lor more compre-
hensive legislation *

Rep. Miller has proposed l*gt*U-
non to create a
federal tyuem
(or compeniat-
ing victim* of

occupation*) du-
ral*. privately
funded by *m- 1
ployer* and
manufacturer*,
'that would »u-
persede data
compensation
system*.

-While I believe ihu t* a more
workable and equitable tytiem. it
ha* encountered **riou» obatarie*
on the way to enactment.* ha ad-
lilted.

Hut. Hep. Miller stressed he n en-
couraged by hit lucre** in adding
■important reform* in the area ol
urrupauonai diuur compensation"
ui the Longshoremen * it Harbor
Worker*' Compensation Act
Amendment ol IMt INI. Sept. 17).

-The Longshore Act modtlie* no-
tice and tiling requirement*. **tab-
lithet a clear batu lor wag* deter-
mination* and asaure* that lho*a
i disease* mamleti alter re-
tirement will quality for benefit!.*
Rep. Miller said.

Specifically. I he amendment* in-
volving orcwpauonal dueoae:
o Aulhoctie beneliu lor retiree*
who toiler permanent physical im-
pairment Irom an occupational dis-
mantle*!* naell alter re-

. uwAlith at the batu lor com-
pensation the claimant'* last wag*
if the injury occur* a year or lew
alter retirement. II the Injury
occur* more than on* year alter re-
tirement. lh# national average
weekly wag* at the Urn* ol Injury
will be used lor determining bene-
lita. Death beneliu will be baaed on
the !***#r ol the applicable percent-
age ol the national average weekly
wag* at ih* urn* ol death or the laat
average annual earninp during lh#
year prtor to retirement.

o Require an employe* or bene-
ficiary to provide notice ol the in-
jury to lh* employer wiihin on*
year and lile the claim wtihm iw*

t ear* alter the employe* or the
eneliciary waa aware, or by exer-
cise of reasonable diligence or by
reason ol medical advice should
have been aware, of the relation-
ship between lh* employment, ihe
diwaie and lh# disability or death.

-From my work on the enacted
I ape.hnr* Art. I believe there
rams lertil* ground lor industry,
labar and Cangreaa la wark la-
gather cooperatively.- Rep. Miller
told the conference attend***. *Our
Continued an pope J*

pr»n 4

Workplace Illness reform

/nm jwyr H

ri|wrirarr with l^ongtlturr wrvroj

,M ,r,l “ ,T ihe ••Ml » Igldlly

«»n all »>•!«-» anti iiimIt II muir likely
that comprehensive IeKiilatNm ran
*«■ drafted and rnacinl *

Hep. Millar advocated reform of
ihe compensation lytiam for urcu-
[•aiitinsl disease victims because
"currant uaia and frdaral worker*
compensation program* era n«i
providing esprdinou* or adiyuaia x
benefits lo injured or disabled '
worker** suffering from ocrupa*
t tonal disease*

"Many worker* are discouraged
from aver entering the companaa-
“**• jungle.* Hap. Millar Charged.

"A* u< mid- IMS. IS slates still
have rrkinrtive statute*' of limits-
turn, making it eitrarnely diffirull
for victims ul lung latency illncsav*
tn qualify fur cuinpenaatMMt. four-
teen t Ute* still base cum|ienaatMMi
on the wage at last eapoaure to the

disabling substance, which means
*n aslrestn* victim in IMS could he
rumpensaied at his IIOO wage
rale *

While some stale* liave reformed
iheir laws. Hep. Miller railed the
reforms 'patchwork *

Rep. Miller commend cti ihe de-
velopment of ihe Asbestos Claims
facility (see related story, page iOl.
but emphasised that the plan deals
.only with the tort liability issue of
Thu asbestos crisis and not the issue
of the worker* rtghu u

And. Rrp. Miller con tended that
'asbestos is the current leading
issue, but it is unly pan of a com-
I *en*a non and lialMlity nightmare
thol stalks manufacturer*, employ-
er* and insurers.

"Tliere are thousands of other
larrinogenic and liasardoua cliemi-
rals and |iroduru in the American
workplace, it it reasonable lo as-
sume Itial. like asbrsius and dioain.
moet or all of these lu balance* will
• Iso provoke disease*, ramprnta-
nun claims and third-party liability
suns"

Already, occupational disease
-victim* are roili-rung an estimated
>3 billion a year in UrneliU paid lor
by laapeyer* though welfare. So-
cial Security disability. Medicare
and Medicaid, veteran » benefits
and other compensation asau lance
programs. Hep. Miller said. "These
payments constitute an unjustified
and unintentional public subsidy of
hasardous Industrie*." he charged.

Rrp. Miller invited members of
thr insurance industy to bo "full
partners in the effort 10 develop a
rational, fiscally responsible, and

•dmimsirable procedure (or adju-
dicating compensation and liability
claims."

In an Interview with flosiaess
* /ita are ace following his remarks.
Rep. Miller said he will release a
new draft of his legislation in f eb*
ruary or March, assuming ho wma
re-election, and will concentrate
his efforts on enactment of hit leg-
islation.

While declining to be specific
about the modifications he intends
to make in his bill, he allowed ihat
if the Asbestos Claims facility is a
success, "it ha* financial implica-
tions for victims. There are differ-
ent notions if the ion liability issue
will be solved quickly.

"In the nest two years, some ver-
sion of this bill will pass.* he pre-
dicted. a

Rockefeller
on bank issue

ow would West Virginia Gov-
ernor John 0. Rockefeller IV vote
on the issue of banks gening into
the Insurance business if he wins
his bid for a seat in the U.S. Senate?

Addressing the the NACSA —
NACSE joint meeting, the Demo-
cratic cnailenger in the West Vir-
ginia Senate rare said he would
first ask: "Will the combination
provide more and better jobs, more
profiu and improve the quality of
Ihe products? Will It provide more
slue or will It only concentrate
he power in the hands ol fewer
eopla?" *

“**■"* r — did not

,nr— IBTT #r “ J.J cJ»*«h!" '••>* 8 PP f ° ach - • auspoct rney took

On* of M*. Moruoth'* omptoy*** cr*at*d ■ aub.Mlut* to otlond aUtf mooting*. the company'. •nor • Up iRSUiatiOn mBnulBCturOfS

... , , ... . . | nNh^lHr 1 ! and name them nil. Us guilt by

It S not whfirft hut how VON do inh assodatfon/ Mr. Joyce soys.

Should workers comp be federalized?

UlU*r i bui. Mr. Goldtwrf taM.

"!t mr|n tha •Mtrn ramp ra-
">•••*• mr Mil nmMin mm a

unfit IM-Iwll w»Mnmm tyt-
'♦"» >*»•• prawidtt an mirf raiad
tunping imiuniM thrawfn •»kii
iht rwvn UMI * rw curranuy Prat-
ing that mporuibtiliy— tha man*,
luclurmn imI Iht rmpiay.ra— may
fund UUM twivtliu m a mar* alii.

INSURANCE
FOR BANK AUTO t
We make sure you a
high-quality earner

* r * *ww.pani«iian rnfinr now. or
pap«| (or a notiy nr. I to. roll.

lion at (IMW ora not nnmtniy
ramptuut.' uu) Rob* a Ob.ii. ||.
ncvu.a Mcrrtar-r to tha Ohio Sail*
Inaurara Aon.

"YatTra tryinf to pluf In naw
maotcai prpblrm. ut aid araaa.' ho

Tha Nation ai Aaan ml laawranra
Commiitianan ano tha IAIABC
oppoaa Irdrranuuon ol workara
romoanaation and point to thraa
currant laoarai

a Harbo
• Art. u
d tito ft

* C.ary workara rampant, non
prafram Utal tha Imrr at fay.rn-
d ha* rapidly bn
canto a high-

Minnies. i
I or no y with
Janaa d> Laugh-
lln Stool Carp, in
Pttlibwrf n

fr ratal tap.* Mr Chaak umI

Mr a law iabalatl tha tltraa fml.ral
work ramp profrtma at 'rtpan-
***•■ evimlwraoma and inalltriant.'

Tha Crum dr F orator ration ran.
lama a doaan brood rarammaruia-
liana (or ttata anion. Ona an iha
funding ml bartalna i a bring lunhrr

a aail inturad ampiuy
nntra uni
Ota *1 thaao rarommandam
“U"“ • Nat t/ta laal amptoyrr
• •°'*ar to a narmlw

Attn., iha NAIC and tha

IAIABC. With mojj ajruuArt front
iha National CaunnJ on C am pan-
aatlod Inotiranra. Mr. Chaak taxi.

Smra tha Crum a> Fontar ryport
ralaaaad. it hat bran prnard
lor Ita aiaborata alloru and tor
publtrally noun ( trial tna tytiam it

: Iha Lan|ikoraota t
1 Warkart Cam panto-

Fine Quality
Solid. And Swiss

■frin iha

moat amployarv Iha aniy food ltd-
oral prof ram in tha
panaauon araa la a
taaa tho Itfhl ol day

*! want to mak a II (Mar mot tall-

aaa rrcalving
banallta II thay
dlaablad Ira m

tapwmiMHWiHiiwi, niU4.

Tha IAIABC fanaraily oppottt
any Irgulauon that would land to
fadaralua tha tytiam or tplli oil

any pan a 1 a tlala tyalam .ad out It
into a ladarai tytiam. UM AoMn

Wallar. a cmmi.alodar an (ha
Cannon Irwt Workara’ Cami

"To tho

Iha. local t.awiutiita tytiam.
ran handla iha prabltm. . .Utal'a
"by wa ra drafting a modal bUL*
That modal bUi la In tha ini ant

•Ufa. but mould ba raady 1

lima nan yttr. Mr. Wallar tail-
»iau«. Tha Inaunnca India try alan
U looking al a tuit-by.uu aoltw

Tha Itlih m. pon

Laalla Chaak. vp-ladaral ailalra at
Crum it Fontar in Washington
capmtUaad Iha (Indlrtf* al a (apart
by Mt company and rail at ad thia
mmrnor iBI. Auf. a

"CW poaitloti raminda am 1

~hai n( a tanat ol Tram automo-
itaa l.l.tr talavtaton rommarrlaU
tavaral yaara ago. Tha ada laaturad
a hard-bman auto iwmtnir w^
al th, uml*f .1 ih« wwk ha
— on hu no toman' ran w M

aphy to tha orrupauanai d'laalTta

WaVe American. In every way. Contemoorary.
Inrormirve. Productive.

&A our Swiss heritage makes us sticklers tor
queliiy. Sticklers tor oonQ mings ngm

• Sate-cx-the-emaeastempereodyoidworid
standards.

Gooa reasons why you should have an
Amencan organization ol Swiss oesceni orcxeciina
yair valued business.

Good reasons to a

Insurance Companies. . ..v ;;

Wa craata mono class ins
Oyltsea *

Come to Zurich-Americai
insurance advice, ^st teenrm
llnancial atrangin to protect yc.

'tou'tl lino we soeax pis m i
c weary, you it hear our Swiss t

Zurich-American

American (Seativity. Swiss" Depend

KILLER. GE0R8E
-achievements and auardc

General r=r i edioa i s

Voles' note major prise at annuel Cs
nods . (Australian Film Institute Awards )
Variety Got U 37 ^ 7(2 >

institute

v32S

Zr.dex-P

General Periodicals Index-P

MILLER , 6ECRSE
-biography

Our ran :n Washing ton. by George L. 3-jker il vS
New West Oct 23 '80 pE2(tQ?

3403 f 46

General Per ic-dlc&ls Incex-P

MILLER , GEORGE
-appreciation

New faces cf 1992. by Oavid Chute il v!9 Film
Comment Fsb ’33 p!8(2)

General Periodicals Index-P

MILLER . GEORGE

-addresses, essays, lectures

Longshore law called model for workplace disease
reform. (George Millar) by Kathryn J. McIntyre il
vl8 Business Insurance Oct 22 '84 pl4<2> 17P481S

General Periodicals Index-P

MILLER , GEORGE
-economic policy

A big squeeze on defense may not deflate the
deficit, ay Eric Felter. il »/5 Insight Jan 8 93

p2G( 2 }

Federalize asbesics compensation: attorney, by
Card Cam vI7 Eusmoco Insurance Oct 17 'S3 p 3

: 30? 990

F2R4 15978

100

^ Cirgress „r,r^z :r.l i.\ \ •. =•-•

by Lloyd Saruarir ! 3 Dijis r-iwi .vj.

. -1-JO .

srs Jan !?

Cdngrsea jrer uoracept i . tr uAsuLnir.imym i des .
by Llovd Schwarts \ v 1 2 Daily h?tewsi Kecord j5n ! 3
'83 p22

T V \

angrtfsja seen unre^eptive to subn\ni

Congress seen unre^eptivc ts 3ubn\nimum wage icfea.
by Lloyd Schwarts vlS Dally News f^ccrd Jan 1fi\

'83 p22t1>\ \ \ \

\ . \

*\ \ General Periodicals Index-?

hilCsr. seo^oe

-btoahwhy N \

'^lur nen £r. UaxhVogton. by Secrge L. Baker il vS
Fieu Uest o\t :a - 39s pS2(!0> \

0403 US \ . \ '

General Periodicals Index-P

MILLER, GEORGE
-energy policy

California lawmaker delivers jab to independents .

(Rep. George Miller? tax incentives for independent
petroleum producers / by Barbara Saunders The Oil
Dally Feb ? *S0 ?l(2)

A® 1

Memo to API: invite George Miller to address your
annual meeting. (American Petroleum Institute)
(column) by Nick SncwThe Oil Daily May IT * * 39
p4( 1 >

House panel
(George Miller?
Prudhoe Bay oil
Oil Daily June

chief raps Interiors role in report .
study of environmental impacts from
field development > by Nick Snow The
13 '28 p!0<2> "

House panel
(George Mi lien
Prudhoe Say oil
Oil Csily June

chief rape Interior's role in report,
study of environmental impacts from
field development) by Nick Snow The
13 '59 p»S'2>

• General Per lcdicais Index-?

MILLER , GEORGE
-environmental policy

101

5 o : 1 1 Ciaorsu;

iulifi:; irulc: v~i ♦ zcz ur,

Wais*-, and Gff%iv:?*£ •!'!*« g : - Resource * *• b/ Lynn

•3 err : i. “re 0;i Csii. ; ^ 1 •. J? 3 1'

LewW-i.Cr jrQCS ■-• 1 i
Georgs Miller u rges t
system/ by Mick Snow

ph:.'

,‘i 1 l ?.t , * y 5 tc:M re-. 1 C4» . ( Fi-ip .

• aw ■: f * idil jr. :» :j de *Je i i \ «sr /
:it* *_* J i. *J ai iy r.pri » 1 • -9

Lawmaker urges oil delivery system review. (Rep.
George Miller urges review of Alaskan crude delivery
system.) by Nick Enow The Oil Daily April U 39
p I < 2 )

General Periodicals Index-P

MILLER, GEORGE
-evaluat ion

The movies, mate: part three: inside Kennedy
Miller, (conclusion of 3-part saries > by Barbara
Samuels il Cinema Canada Dec '54 p2S<5)

General Periodicals Indax-P

MILLER , GEORGE
-interviews

3d 'Mao Max' may be last, but Miller said that
^ before. (George Miller ) by Todd McCarthy v3 1 9

Variety July 24 35 p?( 1 )

Rep. Miller discusses occupationel disease.

(George Miller) by Carol Cain il vi9 Business
Insurance Jan 14 'BE p 14(2 3 1EV2240

A Congressman speaks out for the family. (Rep.
George Miller) by David Goddy ii vll? Scholastic
Update Nov 2 ‘34 p3(2)

17F1433

George Miller, (interview) by David Chute vlS
Film Comment July -Aug ‘82 p28(4)

12K-792

General Periodicals Index- P

MILLER, 5ECRGE

- • n««i t igat 1 on*

Miller granted subpoena power in spill probe.

— (Water, Power end- Offshore Energy Resources

Subcommittee Chairman George Miller empowered to F2R415Q

102

Ringing me c H
ft'ne'-ios Dec ' 1
033C7CS

> m 1 t “l~ 4S1 1

• 4 /

General rtriiflitaij Jroex-P

MILLER , GEORGE
-management

Research rat incubator located in the North Hills.

/ ( ZivicrMiller Laboratories Inc.) (Section 2) by Chnss

Suaney ii v7 Pittsburgh Businesa Tinea Sept !4
*8? plGS(l) 370575S

J Toil and trouble, (waking of The Witches of

Eastuick) by Susan Roether il vl2 American Filn
July-Aug *37 pl7(3)

40A398S

.. General Fer lCGicai a Index-P

MILLER , GEORGE
-mediation and arbitration

Negotiations on child care bill arouse anger. (2
Oenocretic committee leaders in House , Thomas J.

Oouney and George Miller, engaging in independent
negotiations with White House) (National Pages) by
her tin Tolchin 12 col in. vl3S The New York Tines
March 5 30 pAlS(N) pAlS(L) col 2

General Periodicals Index-P

MILLER , GEORGE
-military policy

Congressmen charge U.S. aid to El Salvador buys
war. by Anne Manuel v2! National Catholic Reporter
Feb 22 *85 p3( 1 >

23B5135

General Periodicals Index-P

MILLER, GEORGE

-political activity «

A child care bill will pass as soon as the
Democrats grew up. by Susan 8. Garland il Business
Week Deo 1 1 89 p73( 1 >

Sill would end onshore lease lottery system. The
Oil Daily April 3 '85 p8( 1 ?

CSHA scientists taken to task. ( Occupat ional

F2R4159*

103

fv.f iCul.Ji j i Tiri — .*

miller .. st;ws

-f. 3 ! I t !■-=■ : aOC it- ; Lr-is

tfiii pell* !■; iPf'i d: < i :• a L-aUiui ** ll

vlZ •.'■sini ngioniari lie.". ’ :V * p’GS* !

General Periodicals 2nde v -P

MILLER , GEORGE
-production and direction

The heroes of Thunderdomei on the road with -lad
yj Max. by Kurt Loder il Rolling Stone Rug 29 '85

p4C( 5 )

Dr. George Miller* tfechj s to in
Barbara Sumuais il Cir.cma Canada

e polka-dot tie. by
Feb 83 p-4<2>

. General Periodicals Index-P

MILLER, GEORGE
-research

Loose definitions, (children’ s use of
diet icnanes ) by Jeff tteer v20 Psychology Today
Nov ’85 p20( 2 )

35A0C23

Preventive health programs Pound to ba cost-
effective. by Janet Firshein vS9 Hospitals,

Journal of American Hospital Association Seot IS ‘S5
p37( 2 )

Weapons labs influence test ban debate, by R.
Jeffrey Smith il v222 Science Sept 13 ‘25

pi 0E7< 3 ?

E. equus: immigrant cr emigrant? (equus equus ,
fossil horse) by Gordon Smith and il ;<5
Sclencs’34 April '84 p7E(2)

23C2353

Mind over skis: re-chunking, (psychological
theory) by Denise McCluggago il v34 Skiing Oct

‘81 p*8<2>

0852314

An Illinois s tat i at ic ian takes tha mystery out of
Miss America - he ca'ys it will be nice Kamaa. by
Cmm- £ l r :oer il vl 4 Feccie Uaefciv Sect 3 ‘SO-

Pnn - « *-«

104

’.lut £ - - 3

'Jr a f »

Cflfip^sstle n func. by Lesh Vcuro; ,JE5 J-urr^ #-

Lemma rc 2 end Ccmmerc ic i Jvr. 13 f.4 $*.*^<2?

Th« cSDSStss industry is -3 1 1 zr.p t no t c set up a
federal compensation plsn t.jssd or siats worker
compensation standards. Bscausa many of the worker 3
3i fectsd 5 / asbestos 3*.pc-3u re worked in snipyarca
during the Korean War arid World War II f the industry
claims that the government i« responsible Par the
affected laborers. The. bill's design includes
provisions for a maximum benefit, and payments would
in Either a lump sum or an annuity.

Reo . Miller's fcil
compensating asbestos
by Lawrence P. Postal
Auq 15 ’S3 p!SC2)

still lacks a good Method for
disease >/iciins. (George hi Her)
*'17 business Insurance-

13QI5Z2

Ri»t crows between ED end Congress on proposals
concerning children. 'Education Dept.) (column? by
ftnne C. Lewis v64 Phi Delta Kappan Oct '32
pS3( 1 >

1 0634 2 E

MILLER, GEORGE
-tax policy

General Periodicals Index-P

Th* rich ar«n t the only ones who may get a tax

break, by Susan 5. Garland and Howard Gleckmen il
Business Week August 21 '39 p37( 1 )

MILLER. GEORGE
-technique

General Periodicals Index-P

New Direc t or 3 — New Films? smashed, broken or
missing, by Tom Allen vl8 Film Comment July-Aug
'82 p2< 3 >

12K17SS

The Aye to!) ah of the moviola. (George Miller? by
David Chute ii v!8 Film Comment July-Aug '52
p2S(2>

1 ZK 1731

105

Mr. Hermiller. Thank you, Mr. Chairman. My name is James
Hermiller. I am president of the Alyeska Pipeline Service Compa-
ny.

I am appearing before the Committee on Interior and Insular Af-
fairs to tell what you I know about the investigation by The Wack-
enhut Company into thefts or leaks of highly confidential and priv-
ileged Alyeska documents.

As you know, Alyeska has cooperated fully in furnishing infor-
mation to the committee — including a significant amount of mate-
rial which would never be produced in litigation because it is sub-
ject to the attorney-client privilege.

Let me briefly outline my professional background. In 1966, I
joined Sohio as a chemist. Over the next 18 years, I served at Sohio
in a variety of positions. In 1984, I was appointed vice president-
general manager of the Industrial Chemicals Division for Sohio. In
August 1986, 1 was appointed vice president, refining for BP Oil. In
May 1989, 1 became executive vice president and chief operating of-
ficer at Alyeska.

In October 1989, I became president of Alyeska. As president, I
was responsible for a whole range of issues and problems, including
not only the day-to-day management and operation of Alyeska, but
also, beginning in early 1990, the complete reorganization of the
company.

I became president of Alyeska shortly after the Exxon Valdez
spill. Public confidence in the large oil companies and in Alyeska
was low. I considered it a top priority to do everything in my power
to restore that public confidence.

I took aggressive steps to deal with the aftermath of the Valdez
spill, including the development of a spill prevention response plan
in Prince William Sound, which I consider to be the finest such
plan in the world. I believe that I have been open and attentive to
the concerns of all Alaskans, and that I have been successful in
demonstrating to them that Alyeska shares their determination to
protect and preserve our environment.

The Valdez spill gave rise to an extraordinary amount of litiga-
tion. Alyeska and the other companies found themselves defending
literally dozens of lawsuits. In the course of deciding how to deal
with those lawsuits, Alyeska — like any other defendant in litiga-
tion — consulted with legal counsel. Among those counsel were law-
yers from the Los Angeles law firm Gibson, Dunn & Crutcher.
Those consultations with counsel were, of course, highly privileged
and confidential.

To my great distress, and to the distress of the owners of
Alyeska, we learned at the beginning of 1990 that certain legal doc-
uments containing our confidential communications with our coun-
sel in the Valdez litigation had been stolen or leaked. One such
document was actually shown on a British television program
called the Scottish Eye.

The owners of Alyeska and I viewed the unauthorized dissemina-
tion of these highly confidential documents as intolerable. The
theft or leaking of these documents, coupled with my preexisting
concern over previous unauthorized dissemination of technical and
legal documents, led me to conclude that steps should be taken to

106

determine who was stealing or leaking the documents from within
Alyeska.

In early February 1990, 1 spoke about this matter with J. Patrick
Wellington, chief of security for Alyeska, and subsequently with his
immediate supervisor, Mr. Steven Dietrich, vice president of ad-
ministration. Mr. Wellington had been at Alyeska for 12 years;
before that, he had served as director of the Alaska State Troopers
and as commissioner of the Alaska Department of Public Safety.

As I recall, I asked Mr. Wellington what could be done about the
theft or leaking of Alyeska’s documents. Mr. Wellington made con-
tact with The Wackenhut Company, which had long provided secu-
rity to Alyeska through a subsidiary. Mr. Wellington informed me
that Wackenhut could undertake an investigation into the theft or
leaking of the Alyeska documents, and I authorized that investiga-
tion. I understood Wackenhut to be one of the world’s most promi-
nent and reputable investigative firms.

At all times, it was my intention that the investigation proceed
in strict compliance with the law. The Wackenhut investigation
began in March 1990. Mr. Wellington briefed me periodically on
the progress of the investigation.

During the course of the investigation, Mr. Wellington informed
me that Wackenhut had confirmed that Mr. Charles Hamel was in
possession of numerous stolen or leaked Alyeska documents, in-
cluding legal documents prepared for Alyeska by lawyers at
Gibson, Dunn & Crutcher.

Mr. Wellington also told me that certain Wackenhut representa-
tives were posing as members of an environmental organization,
that Mr. Hamel’s trash was being collected and searched, and that
certain conversations between Wackenhut representatives and Mr.
Hamel were being recorded — all in an effort to learn how Mr.
Hamel had obtained confidential documents from Alyeska’s files.

I wish to stress that I was told, and I believed, that all of these
investigative techniques were lawful and proper.

In May 1990, the Miami law firm of Richey, Munroe, Fine &
Goodman was retained to furnish advice in connection with the in-
vestigation. The two members of that firm principally involved in
advising Alyeska — Mr. William Richey and Mr. Jonathan Good-
man — both are former prosecutors with a wealth of criminal law
experience. It was my understanding that the Richey, Monroe firm
remained involved in the investigation until its conclusion.

Also, in approximately July 1990, Mr. Wellington and I advised
then-Alyeska general counsel Alfred T. Smith about the investiga-
tion. Mr. Smith, in turn, involved one of his top attorneys, Mr. Lon
Trotter. Mr. Smith also retained the prominent law firm of Baker
& Hostetler McCutchen Black and also Alaska attorney Edward
Boiko.

To my knowledge, none of these lawyers ever indicated any
doubt about the legality of the activities undertaken by Wackenhut
in the course of this investigation. I felt comfortable in the conduct
of the investigation given the involvement and oversight of these
experienced attorneys.

By the end of August 1990, it had become apparent to me and
others that the investigation would produce little additional infor-
mation on the source of the stolen or leaked Alyeska documents. I

107

discussed with counsel various options, including whether Alyeska
could file a civil lawsuit against Mr. Hamel.

On September 25, 1990, I met with representatives of several
Alyeska Owner Companies in Denver to discuss these options.
After discussion, the owners directed that the investigation be
halted. The owners reiterated this directive at a subsequent meet-
ing in La Costa, California on October 3, 1990. I complied at once
with the owners’ instructions.

The investigation into the stolen or leaked documents stopped,
and Wackenhut was directed to disengage from Mr. Hamel as
quickly as possible.

It is now clear that the damage to Alyeska’s reputation in
Alaska and in Congress outweighs the benefits that have resulted
from the investigation.

At the time, however, I believed that the investigation was justi-
fied by the extremely serious harm that Alyeska had suffered and
was suffering from the theft or leaking of its highly confidential
documents. Indeed, whatever else may be said about the investiga-
tion, it confirmed the seriousness of the problem Alyeska faced:
Mr. Hamel, in fact, had in his possession hundreds of pages of
stolen or leaked Alyeska documents, including highly confidential
legal documents, and he appeared intent on using those documents.

Moreover, it was never my intention to interfere in any manner
with the workings of this committee, with its chairman, or with
any other Member of Congress. I hold the Congress as an institu-
tion in the highest respect, and I have particular regard for this
committee and the work it does. It is my hope we can put this
matter behind us and work together on the pressing issues we face.
I’d be happy to answer questions, Mr. Chairman.

The Chairman. Thank you.

[Prepared statement of Mr. Hermiller follows:]

108

STATEMENT OF JAMES B. HERMILLER
TO THE COMMITTEE ON
INTERIOR AND INSULAR AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES
NOVEMBER 5. 199 X

My name is James B. Hermiller. I am President of the
Alyeska Pipeline Service Company. I am appearing before the
Committee on Interior and Insular Affairs to tell you what I know
about the investigation by the wackenhut Corporation into thefts
or leaks of highly confidential and privileged Alyeska documents.
As you know, Alyeska has cooperated fully in furnishing
information to the Committee — including a significant amount of
material which would never be produced in litigation because it
is subject to the attorney-client privilege.

Let me briefly outline my professional background. In
1966 , I joined Sohio as a chemist. Over the next 18 years, I
served at Sohio in a variety of positions. In 1984, I was
appointed Vice President-General Manager of Industrial Chemicals
for Sohio. In August 1986, I was appointed Vice President,
Refining for BP Oil. In May 1989, I became Executive Vice
President and Chief Operating Officer of Alyeska.

In October 1989, I became President of Alyeska. As
President, I was responsible for a whole range of issues and
problems, including not only the day-to-day management and
operation of Alyeska, but also, beginning in early 1990, the
complete reorganization of the company. I became President of
Alyeska shortly after the Exxon Valdez spill. Public confidence
in the large oil companies and in Alyeska was low. I considered
it a top priority to do everything in my power to restore that

109

public confidence. I took aggressive steps to deal with the
aftermath of the Valdez spill, including the development of a
spill prevention response plan in Prince William Sound, which I
consider to be the finest such plan in the world. I believe that
I have been open and attentive to the concerns of all Alaskans,
and that I have been successful in demonstrating to them that
Alyeska shares their determination to protect and preserve our
environment.

The Valdez spill gave rise to an extraordinary amount
of litigation. Alyeska and the other companies found themselves
defending literally dozens of lawsuits. In the course of
deciding how to deal with those lawsuits, Alyeska — like any other
defendant in litigation — consulted with legal counsel. Among
those counsel were lawyers from the Los Angeles law firm Gibson,
Dunn & Crutcher. Those consultations with counsel were, of
course, highly privileged and confidential.

To my great distress, and to the distress of the owners
of Alyeska, we learned at the beginning of 1990 that certain
legal documents containing our confidential communications with
our counsel in the Valdez litigation had been stolen or leaked.
One such document was actually shown on a British television
program called The Scottish Eye . The owners of Alyeska and I
viewed the unauthorized dissemination of these highly
confidential documents as intolerable. The theft or leaking of
these documents, coupled with my preexisting concern over
previous unauthorized dissemination of technical and legal

110

documents, led me to conclude that steps should be taken to
determine who was stealing or leaking the documents from within
Alyeska.

In early February of 1990, I spoke about this matter
with Mr. J. Patrick Wellington, Chief of Security for Alyeska,
and subsequently with his immediate supervisor, Mr. Steven
Dietrich, vice President, Administration. Mr. Wellington had
been at Alyeska for twelve years; before that, he had served as
Director of the Alaska State Troopers and as Commissioner of the
Alaska Department of Public Safety. As I recall, I asked
Mr. Wellington what could be done about the theft or leaking of
Alyeska* s documents. Mr. Wellington made contact with the
Wackenhut Corporation, which had long provided security to
Alyeska through a subsidiary. Mr. Wellington informed me that
Wackenhut could undertake an investigation into the theft or
leaking of the Alyeska documents, and I authorized the
investigation. I understood Wackenhut to be one of the world's
most prominent and reputable investigative firms. At all times
it was my intention that the investigation proceed in strict
compliance with the law.

The wackenhut investigation began in March 1990.

Mr. Wellington briefed me periodically on the progress of the
investigation. During the course of the investigation,

Mr. Wellington informed me that Wackenhut had confirmed that
Mr. Charles Hamel was in possession of numerous stolen or leaked
Alyeska documents, including legal documents prepared for Alyeska

Ill

by lawyers at Gibson, Dunn & Crutcher. Mr. Wellington also told
me that certain Wackenhut representatives were posing as members
of an environmental organization, that Mr. Hamel's trash was
being collected and searched, and that certain conversations
between Wackenhut representatives and Mr. Hamel were being
recorded — all in an effort to learn how Mr. Hamel had obtained
confidential documents from Alyeska's files. I wish to stress
that I was told, and I believed, that all of these investigative
techniques were lawful and proper.

In May 1990, the Miami law firm of Richey, Munroe, Fine
& Goodman, P.A. was retained to furnish advice in connection with
the investigation. The two members of that firm principally
involved in advising Alyeska — Messrs. William Richey and Jonathan
Goodman — both are former prosecutors with a wealth of criminal
law experience. It was my understanding that the Richey, Munroe
firm remained involved in the investigation until its conclusion.
Also, in approximately July 1990, Mr. Wellington and I advised
then-Alyeska General Counsel Alfred T. Smith about the
investigation. Mr. Smith, in turn, involved one of his top
attorneys, Mr. Lon Trotter. Mr. Smith also retained the
prominent law firm of Baker & Hostetler McCutchen Black and
Alaska attorney Edward Boiko. To my knowledge, none of these
lawyers ever indicated any doubt about the legality of the
activities undertaken by Wackenhut in the course of the
investigation. I felt comfortable in the conduct of the

112

investigation given the involvement and oversight of these
experienced attorneys.

By the end of August 1990 , it had become apparent to me
and others that the investigation would produce little additional
information on the source of the stolen or leaked Alyeska
documents. I discussed with counsel various options, including
whether Alyeska could file a civil lawsuit against Mr. Hamel. On
September 25, 1990, I met with representatives of several Alyeska
owner companies in Denver, Colorado to discuss these options.
After discussion, the owners directed that the investigation be
halted. The owners reiterated this directive at a subsequent
meeting in La Costa, California on October 3, 1990. I complied
at once with the owners' instructions. The investigation into
the stolen or leaked documents stopped, and Wackenhut was
directed to disengage from Mr. Hamel as quickly as possible.

In retrospect, while the Wackenhut investigation was
legal, its implementation may not have been wise. It is not
enough for Alyeska to operate within the law. The company must
also operate within the limits of a public consensus about the
conduct of large corporations. It is now clear that the damage
to Alyeska ' s reputation in Alaska and in Congress outweighs the
benefits that have resulted from the investigation. At the time,
however, I believed that the investigation was justified by the
extremely serious harm that Alyeska had suffered and was
suffering from the theft or leaking of its highly confidential
documents. Indeed, whatever else may be said about the

113

investigation, it confirmed the seriousness of the problem
Alyeska faced: Mr. Hamel in fact had in his possession hundreds

of pages of stolen or leaked Alyeska documents, including highly
confidential legal documents, and he appeared intent on using
those documents .

I want to reiterate that at no time during the
investigation into the stolen or leaked Alyeska documents did I
believe that anything done was unlawful or improper. Had I
thought so, I would have halted the investigation immediately.
Moreover, it was never my intention to interfere in any manner
with the workings of this Committee, with its Chairman, or with
any other Committee or Member of Congress. I hold the Congress
as an institution in the highest respect, and I have particular
regard for this Committee and the work it does. It is my hope
that we can put this matter behind us and work together on the
pressing issues we face.

114

The Chairman. Mr. Wellington.

Mr. Wellington. Mr. Chairman, Mr. Young, Members of the
committee, I have a 35-year record of service in Alaska to law en-
forcement and other public positions. I mention this because it re-
lates directly to my role in the implementation of the Wackenhut
investigation.

My personal and professional background is outlined in the state-
ment that I have already submitted to the committee, so I will not
repeat it here.

In summary, I want the committee to know that I have had the
honor to work for every Governor since Alaska became a State.
Among other jobs, I served in the late Governor Bill Egan’s cabinet
as commissioner of public safety and Governor Jay Hammond’s po-
sition as director of the Alaska State Troopers.

I have been elected three times to the Public Employees Retire-
ment Board for the State of Alaska. I am a member of many pro-
fessional and volunteer groups, and I have lived in Alaska all my
life.

The purpose of the investigation was to identify the persons
stealing confidential Alyeska documents, recover stolen confiden-
tial documents, and prevent further thefts.

Mr. Chairman, there were three purposes of the investigation.
This is the subject of this hearing. First, to find the source of the
thefts within Alyeska. Second, to secure the return of any stolen
documents, if possible. And third, to ensure that there be no fur-
ther thefts of documents.

A confirmation of incidents of stolen confidential documents or
information dictated Alyeska’s decision to commence the investiga-
tion. In late January 1990, about 1 month prior to the onset of the
investigation, a British television program, Scottish Eye, showed a
cover page of a confidential attorney-client privileged memoran-
dum authorized by outside counsel representing Alyeska.

The memorandum contained confidential legal advice directly re-
lated to ongoing legal proceedings concerning the Exxon Valdez oil
spill. The document had been prepared only a few months before
the broadcast.

At the time of the document’s theft and subsequent disclosure,
there was ongoing litigation affecting Alyeska in both the State
and Federal arena. Under these circumstances, the identification of
the source of the thefts of the privileged legal documents concern-
ing matters of major importance to Alyeska and the return of these
stolen documents were legitimate goals for Alyeska management
and my security department.

Thus, a policy decision was made to initiate the investigation.
The suspicion at the time the investigation was initiated was that
other sensitive legal documents had also been stolen from Alyeska.

The suspicion was confirmed during the investigation when nu-
merous attorney-client privileged documents, including the Scottish
Eye memorandum and other voluminous Alyeska internal docu-
ments, were discovered in Mr. Hamel’s home.

Prior to the initiation of the investigation, Mr. Hamel had
bragged to the press that he possessed Alyeska documents. His
public admission that he had received Alyeska property invited an

115

investigation to determine if he knew the identity of the actual
source of the theft of these documents.

There were other incidents of documents and information being
stolen from Alyeska prior to the initiation of the investigation. For
example, in 1989, Alaska police authorities recovered a box of tech-
nical internal documents in the trunk of an impounded vehicle.
The box was addressed to Mr. Charles Hamel. In another instance,
a detailed hand-drawn diagram of an Alyeska facility was leaked to
the press and shown on Alaska television.

No. 2, Alyeska engaged The Wackenhut Company to conduct an
investigation that was legal, that would eventually be exposed to
the public review, and would obtain evidence to be submitted in a
court of law.

Alyeska engaged Wackenhut to conduct the investigation. Wack-
enhut’s national reputation as a highly respected company was
known to Alyeska management and to me.

Under a separate contract with Alyeska, Wackenhut performs
security for the entire 800 miles of the Trans-Alaska pipeline and
our Valdez facility for the past 15 years.

With respect to the investigation into the thefts of privileged doc-
uments, I gave at the outset explicit instructions to Wackenhut
management that every aspect of the investigation be conducted le-
gally.

The president, vice president, CEO of the company, and all indi-
viduals involved in the investigation were charged with this. To my
knowledge, this instruction was carried out.

In addition, Wackenhut management understood and concurred
from the beginning that the entire operation would be conducted in
such a way that the investigative methods would be subject to
public scrutiny and all evidence, all evidence, obtained might be
used in a court of law at a later date, including possible criminal or
civil prosecutions to stop the thefts and to recover the stolen prop-
erty.

Item No. 3: Alyeska was advised by counsel during the course of
the investigation that the methodology of the investigation was
legal. Various lawyers as well as management of Alyeska were in-
formed, approved, or reviewed virtually every aspect of the investi-
gation as it proceeded.

The attorneys who were consulted or provided advice to Alyeska
included in-house counsel for Wackenhut, in-house counsel for
Alyeska, two private attorneys in Florida who had extensive Feder-
al and State prosecutorial experience, private counsel from Califor-
nia who were retained to prepare civil lawsuits to recover stolen
documents, and private counsel in Alaska who was retained to
assist private counsel in California. None of these attorneys ad-
vised Alyeska or me that any Wackenhut activities were illegal at
any time.

Next point: A policy decision was made to terminate the investi-
gation. After several months, Alyeska owners and management
made a policy decision to terminate the investigation. I followed
the instructions given to me and immediately ordered Wackenhut
to cease the operation and to begin an orderly shutdown.

In conclusion, Mr. Chairman, the severity of the problem of priv-
ileged and confidential Alyeska documents being stolen strikes at

116

the heart of Alyeska’s internal security. Threats to Alyeska due to
thefts of such documents demand that preventive and remedial
measures be taken.

Moreover, it is important to determine the extent of the thefts
and identify other possible recipients of stolen documents. The
Wackenhut investigation, implemented to collect evidence for use
in a court of law and reviewed by various attorneys on an ongoing
basis, was designed to be a legal response to this situation.

Thank you very much, and I invite your questions.

The Chairman. Thank you for your testimony.

[Prepared statement of Mr. Wellington follows:]

117

STATEMENT OF JAMES PATRICK WELLINGTON

I. INTRODUCTION

Mr. Chairman, Mr. Young, Members of the Committee:

My name is Pat Wellington. I am the Manager of Corporate
Security at the Alyeska Pipeline Service Company. I appear
before you today to assist the Committee in its hearing on an
investigation conducted by Alyeska into the theft of sensitive
legal and confidential documents.

At the outset, it may be helpful for me to outline my per-
sonal and professional background so that the Committee will have
a complete understanding of my experience and responsibilities as
they relate to my role in the implementation of the
investigation.

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118

II. RECORD OF LAW ENFORCEMENT PUBLIC SERVICE
Prior to becoming Alyeska's Manager of Corporate Security in
1978, I served the people of Alaska in a number of jobs. Perhaps
the most p.rominent position I held was Commissioner of the Alaska
Department of Public Safety, which was a cabinet level position.

I was appointed to that office in February 1974, after more than
three years as the Deputy Commissioner in the same Department.

My appointment followed fifteen years of service to Alaska in
several law enforcement agencies. From 1955 to 1962, I was a
member of the Seward Police Department in Seward, Alaska; I
served as a Deputy United States Marshal for the Territory of
Alaska; and I was a member of the Alaska State Troopers in
Anchorage and Juneau. In 1962, I became the Assistant Chief of
Police of the Juneau Police Department and became the Chief of
the Juneau Police Department in 1963, serving in that post for
seven years. In 1975, I was appointed to be the Director of the
Alaska State Troopers, and I directed the Troopers for three

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119

years. During my time of public service, I have worked for every
Governor since Alaska became a state.

I continue to serve the law enforcement community through
membership in various professional groups. I am now the Chairman
of the Alaska State Troopers Golden Anniversary Committee. I am
a life member and past president of the Alaska Association of
Chiefs of Police, a life member and past president of the Alaska
Peace Officers Association, a member and past-president of the
FBI National Academy, a life member of the International Associa-
tion of Chiefs of Police, and of the Alaska Police Officers Asso-
ciation .

Since retiring from the State Troopers in December 1977, I
have been involved with providing security for the Trans-Alaska
pipeline, including brief service with one of its shareholders.

As Alyeska's Manager of Corporate Security, I organize and manage
one of the most elaborate private security departments in the
country. The department provides a secure environment for the

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120

800 miles of pipeline that carries almost 25% of the domestic oil
supply.

In addition to my employment in law enforcement, I have vol-
unteered my time to serve the public. I am currently serving my
third, six-year term as one of two elected members of the Alaska
Public Employee Retirement Board, having been elected by the
40,000 city, state and retired employees who belong to the Alaska
retirement system. I have also volunteered as an Assistant Fire
Chief in Douglas, Alaska, as Vice Chairman of the Anchorage Crime
Commission, and as a member of the Budget and Fiscal Review Com-
mittee of Mayor Thomas Fink of Anchorage. I am presently the
District Chairman of the Employers in Support of the Guard and
Reserve Department of Defense Committee, and am also a member of
the Anchorage Food Bank.

My military service includes two years in the United States
Army at Fort Richardson, Alaska, and I am a member of AMVETS.

- 4 -

121

Finally, I belong to the Juneau Elks Lodge, Seward Masonic
Lodge and the Shriners Nile Temple of Seattle.

I was born in Alaska and have lived there my entire life. I
have been married since 1958. I have four children and six
grandchildren.

III. THE PURPOSE OF THE INVESTIGATION WAS TO IDENTIFY THE
PERSON (S) STEALING CONFIDENTIAL ALYESKA DOCUMENTS,
RECOVER STOLEN DOCUMENTS. AND PREVENT FUTURE THEFTS

Mr. Chairman, there were three purposes of the investigation
that is the subject of this hearing: first , to find the source

of the thefts within Alyeska; second , to secure the return of any
stolen documents, if possible; and third , to ensure that there be
no future thefts of documents. A confirmed instance of stolen
confidential documents or information dictated Alyeska' s decision
to commence the investigation. In late January 1990, about one
month prior to the onset of the investigation, a British televi-
sion program, Scottish Eve , showed the cover page of a confiden-
tial, attorney-client privileged memorandum authored by an

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122

outside lawyer representing Alyeska. The memorandum contained
confidential legal advice directly related to ongoing legal
proceedings concerning the Exxon Valdez oil spill. The document
had been prepared only a few months before the broadcast. At the
time of the document's theft and subsequent disclosure, there was
other ongoing litigation affecting Alyeska in both the state and
federal arenas. Under these circumstances, the identification
of the source of the thefts of privileged, legal documents con-
cerning matters of major importance to Alyeska, and the return of
those stolen documents were legitimate goals for Alyeska manage-
ment and my security department. Thus, a policy decision was
made to initiate the investigation. The suspicion at the time
the investigation was initiated was that other sensitive, legal
documents had also been stolen from Alyeska. That suspicion was
confirmed during the investigation when numerous attorney-client
privileged documents, including the Scottish Eve memorandum, and

- 6 -

123

voluminous other Alyeska internal documents were discovered in
Mr. Hamel's home.

Prior to the initiation of the investigation, Mr. Hamel
bragged to the press that he possessed Aleyska documents. His
public admission that he had received Alyeska property invited an
investigation to determine if he knew the identity of the actual
thief of those documents.

There were other instances of documents and information
being stolen from Alyeska prior to the initiation of the investi-
gation. For example, in 1989, Alaska police authorities recov-
ered a box of technical internal Alyeska documents in the trunk
of an impounded car. The box was addressed to Charles Hamel. In
another instance, a detailed, hand-drawn diagram of an Alyeska
facility was leaked to the public and shown on Alaska television.

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124

IV. ALYESKA ENGAGED WACKENHUT TO CONDUCT AN INVESTIGATION
THAT WOULD BE LEGAL, THAT WOULD EVENTUALLY BE EXPOSED
TO PUBLIC REVIEW AND THAT WOULD OBTAIN EVIDENCE
ADMISSIBLE IN A COURT OF LAW

Alyeska engaged Wackenhut to conduct the investigation.
Wackenhut's national reputation as a highly respected investiga-
tory company was known to Alyeska management and to me. Under a
separate contract with Alyeska, Wackenhut's performance in pro-
viding security for the pipeline for fifteen years has been exem-
plary. With respect to the investigation into the thefts of
privileged documents, I gave at the outset explicit instructions
to Wackenhut management that every aspect of the investigation be
conducted legally. The president and vice president of
Wackenhut, as well as the individual charged with carrying out
the investigation, acknowledged my instructions. In addition,
Wackenhut management understood and concurred from the beginning
that the entire operation would be conducted in such a way that
the investigatory methods would be subjected to public scrutiny
and that all evidence obtained during the investigation would be

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125

admissible in open court, including possible criminal prosecu-
tions, to stop the thefts and to recover stolen documents.

V. ALYESKA WAS ADVISED BY COUNSEL DURING THE COURSE OF
THE INVESTIGATION THAT THE METHODOLOGY OF THE
INVESTIGATION WAS LEGAL

Various lawyers, as well as management of Alyeska, were
informed of, approved or reviewed virtually every facet of the
investigation as it proceeded. The attorneys who were consulted
or provided advice to Alyeska included in-house counsel for
Wackenhut, in-house counsel for Alyeska, two private attorneys in
Florida who had extensive federal and state prosecutorial experi-
ence, private counsel from California retained to prepare a civil
lawsuit to recover stolen documents, and private counsel in
Alaska assigned to assist California counsel. None of these
attorneys advised Alyeska or me that any of Wackenhut* s activi-
ties were illegal.

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126

VI. A POLICY DECISION WAS MADE TO TERMINATE THE

INVESTIGATION

After several months, Alyeska's owners and management made
the policy decision to terminate the investigation. I followed
the instructions given to me and immediately ordered Wackenhut to
cease the operation and begin an orderly shut down.

VII. CONCLUSION

The severity of the problem of privileged and confidential
Alyeska documents being stolen strikes at the heart of Alyeska's
internal security. Threats to Alyeska due to the thefts of such
documents demanded that preventive and remedial measures be
taken. Moreover, it was important to determine the extent of the

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127

thefts and identify other possible recipients of the stolen docu-
ments. The Wackenhut investigation, implemented to collect evi-
dence for use in a court of law and reviewed by various attorneys
on an ongoing basis, was designed to be a legal response to the
situation.

SWORN TO AND SUBSCRIBED before me this

v*c

V day of November,

1991 .

tl/i.

NOTARY PUBLIC

(NOTARIAL SEAL)

1ISSI0N EXPIRES:

CLEMM1EM. WILSON

DUtrictoIColumbU _

Octobn 31 . 1" 5

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128

The Chairman. Mr. Richey, we spent a lot of time this morning
discussing Mr. Wayne Black. How long have you known him?

Mr. Richey. I think about 12 years.

The Chairman. You have done other legal work for him, prior to
his time at Wackenhut?

Mr. Richey. I met Mr. Wayne Black when I was chief assistant
State attorney in Dade County. Mr. Black was a Metro Dade
County police officer especially assigned to the DEA for undercover
drug work, was a good quality, serious policeman assigned over to
the Feds.

The Chairman. So he worked on cases that you had or your divi-
sion had?

Mr. Richey. That the State attorney’s office had. I was chief of
all special prosecutions and special investigations for the Dade
County State attorney’s office. This included narcotics, organized
crime, economic fraud, consumer fraud, public corruption, that
kind of thing. And I met Mr. Black through those contacts.

We then hired Mr. Black and he came to work for the Dade
County State attorney’s office as a supervisor in the investigative
unit. The State attorney’s office has its own investigative unit with
which we investigated police officers, public corruption, and certain
kinds of special investigations. Mr. Black participated in that.

He subsequently — I left the State attorney’s office in 1981. He
became a private investigator, and I employed him to work for me
on various matters over the years.

The Chairman. In your private practice?

Mr. Richey. Yes, sir.

The Chairman. I am not sure that I am quite clear. Your in-
volvement in this matter came how? Through Mr. Black or
through Alyeska?

Mr. Richey. Through Mr. Black. Mr. Black telephoned me
around the middle of the day one day in May, and said, I have a
very important matter, I would like to see you right away, as soon
as I possibly can, and discuss it with you. And I could not see him
until about 5:00 that afternoon, and I arranged for him to come in,
I think 4:30, 5:00, and we began meeting with him around 5:00 in
the afternoon.

He told me that the client was Alyeska, that I was being em-
ployed by Alyeska, that he was an agent of Alyeska working on
this investigation, that they had been the victim of serious criminal
activity by persons inside the corporation, and that he had been in-
vestigating and attempting to find the leaks of attorney-client priv-
ileged documents.

There had been some sort of television show or program involved
in exhibiting attorney-client privileged documents, and this had
caused quite an uproar at Alyeska, as I understood it. And based
upon this he started an investigation sometime before, and came
into my office to discuss the fact that the preceding day, he had
had a meeting with Mr. Charles Hamel in Virginia, and Mr. Hamel
had made mention of you, and had some discussions about you, and
Mr. Black was concerned about this, and wanted, you know, he
and/or Mr. Wellington and/or Mr. Hermiller, I am not sure exact-
ly how the concern was organized and expressed, but Mr. Black
wanted to see me about the investigation in general, working with

129

them on the investigation as they had legal questions, because it
had become a much more sensitive and serious matter, they felt,
when your name was mentioned. That is how I got involved.

The Chairman. Now, the investigation had been going on how
long before you met with Mr. Black? The May 17 meeting, isn’t it?

Mr. Richey. Yes, sir, it is May 17, and I believe there had been
some initial contact by Mr. Wellington in February, but the inves-
tigation really hadn’t been doing much until March. So I think it
was March, April, May— just a second, let me — well, I think that’s
correct. I think that’s correct.

The Chairman. And in this conversation you had with Mr.
Black, my understanding from your memo is, if it is me, I was not
identified, just that a Congressman’s name had come up. Did he
identify the Congressman to you?

Mr. Richey. I believe your name was mentioned, that you were
the person who was mentioned.

The Chairman. I don’t want to ask you if you knew who I was.

Mr. Richey. Excuse me.

The Chairman. I am sorry.

Mr. Richey. I apologize to all the Members of the committee. Mr.
Johnston, who’s not here now, is the only Member of your commit-
tee of whom I was aware. He’s a very prominent and respected
person in Florida.

The Chairman. As opposed to the rest of the Members

Mr. Richey. You are not in Florida. I am sure you are prominent
and respected.

The Chairman. I am reading from your May 22 memo on the
first page about the allegations that “a U.S. Congressman has been
. . . requesting the theft of confidential” material. So you didn’t
identify it in your memo, but you may have known the identity —
my identity or a Congressman’s identity? [See page 453.]

Mr. Richey. I believe we knew your identity, yes, sir, and I re-
quested Mr. Black

The Chairman. Did he describe to you how that had taken place,
how that had come about? You just said essentially that Mr. Black
said that this had come up in some contacts he had with Mr.
Hamel. Did he go through the kinds of contacts or the situation in
which that came up?

Mr. Richey. He indicated he had been in Virginia the preceding
day, that he had just come back, that he had been with Mr. Hamel
part of that day, and that your name had come up, discussions
about you had come up, and it caused him concern.

The Chairman. Mr. Hermiller, what is the Scottish Eye pro-
gram?

Mr. Hermiller. The Scottish Eye program, Mr. Chairman, was a
program about the Exxon Valdez oil spill, and the response to that
spill.

The Chairman. During this program, a document, an internal
document of Alyeska’s, appeared, I guess?

Mr. Hermiller. It was an attorney-client privileged document
that related to

The Chairman. Of Alyeska’s.

Mr. Hermiller. Yes. It had been prepared by outside counsel.

The Chairman. It was not one of the parent companies, was it?

130

Mr. Hermiller. It was an Alyeska document.

The Chairman. That was shown on TV?

Mr. Hermiller. That is correct.

The Chairman. Mr. Richey says that caused an uproar. What
was the uproar?

Mr. Hermiller. I think “uproar” may be an overstatement.
There was great concern expressed on the part of the owners and
in Alyeska itself that a confidential, privileged document could get
out of the system, first of all, and even more ridiculous, that it
could be shown on TV. That was the concern.

And beyond that, if that document were getting out of the
system, how many other documents were getting out of the system?

The Chairman. So you went to Mr. Wellington, and asked, how
can this be stopped?

Mr. Hermiller. I think first I talked to our general counsel at
Alyeska, and I think we both talked to Mr. Wellington, and at that
point in time, we just discussed the loss of these documents. Later I
talked to Mr. Wellington and asked him how we could prevent the
loss of these documents.

The Chairman. Mr. Wellington, I am just reading from your con-
clusion, when you say that the “Alyeska documents being stolen
strikes at the heart of Alyeska’s internal security.” By that you
mean what? Let me ask you, do you mean the internal manage-
ment of the entity?

Mr. Wellington. What I mean, Mr. Chairman

The Chairman. There are two types of security. There is a physi-
cal threat to the pipeline, the ships, that you also have to deal
with.

Mr. Wellington. I am prepared to answer your question. The
statement that I said here dealt with what we considered to be a
very serious breach of our security at the corporate level, where a
client’s private, very privileged legal documents found their way
outside of our company and on television. I considered that, in my
professional experience, of over 35 years in law enforcement and
private security, a very serious breach of security.

The Chairman. I understand that. What I am trying to deter-
mine by the question is, by “internal security,” do you mean the
day-to-day business discourse that the entity has to take on? If you
have to talk in a privileged fashion to somebody, if you have to
create documentation between you and your attorneys or others,
you are talking about the security of that business system. Is that
what you mean?

Mr. Wellington. Let me state it another way, Mr. Chairman. At
that time, we did not know what documents were leaking, who
they were being leaked to, or what the intent of the person was
who had the documents. It could very well be that they were going
to be used or could be used or possibly be used as sabotage against
the pipeline. I had no idea.

We do know we had an internal, working document of a facility
in Valdez. We had technical operational manuals that described in
great detail how to operate Alyeska facilities, that if they fell in
the wrong hands, could be used to sabotage a pipeline. We just
didn’t know what we were dealing with.

131

The Chairman. Up until the time, I guess, of the Scottish Eye
television show, to what use had the documents been made?

Mr. Wellington. What documents?

The Chairman. The documents that were apparently out there,
that launched this investigation. How were those documents being
used? What was the history over the previous 2 years or 3 years?

Mr. Wellington. Basically, I would say, Mr. Chairman, that the
history of the documents that we became aware of or were referred
to was done by the bragging of Mr. Hamel in the press. He did not
wave the documents, but he talked about them.

The other ones, as I indicated, were the technical documents — let
me finish — the technical documents in the impounded vehicle oper-
ated by a burglar addressed to Mr. Hamel, the technical diagram
that appeared on an Anchorage television station concerning a fa-
cility in Valdez. That’s how they were used.

The Chairman. You lost me. What was operated by a burglar?

Mr. Wellington. The vehicle that was impounded.

The Chairman. Not the documents?

Mr. Wellington. I don’t know what the use of the documents
was, other than that they were in an impounded vehicle, sir.

The Chairman. Were those the documents that were at EPA?
This was a box of documents of something that was in EPA and
EPA had used them and was returning them, I guess, to Mr.
Hamel; is that what it was?

Mr. Wellington. Our investigation revealed, Mr. Chairman,
that the documents had been mailed from EPA in Seattle to Mr.
Hamel in Alaska. We called EPA and said, is this so, did you mail
these documents back to Mr. Hamel, and the individual said, yes,
we did.

The Chairman. So we are talking about the same documents?

Mr. Wellington. Yes, we are.

The Chairman. OK. Thank you.

Mr. Young.

Mr. Young. Mr. Chairman, Mr. Richey, there have been a lot of
comments today, accusations about telephone conversations, appar-
ently taped, of Mr. Hamel back in Florida by Mr. Black. If that
was — if that occurred, if it did occur, is that a violation of a Florida
law?

Mr. Richey. Can you give me that again? What are the facts?

Mr. Young. The accusation we heard today, that Mr. Black
taped telephone conversations with Charles Hamel and which
Hamel made back to Black in Florida, to Black himself.

Mr. Richey. Let me make sure I have the facts.

Mr. Young. Hamel is calling Black.

Mr. Richey. Mr. Hamel is in Virginia.

Mr. Young. Probably, I don’t know.

Mr. Richey. Virginia or Washington, DC. Mr. Black is in Florida.

Mr. Young. Right.

Mr. Richey. And a telephone conversation is tape-recorded by
Mr. Black in Florida, all right? The answer is, no, that is not a vio-
lation of chapter 934, Florida statutes. And let me tell you why.

The Security of Communications Act in the State of Florida,
chapter 934, section 2, subsection 2, is the definition of oral commu-
nications. And what is illegal in Florida is to unlawfully intercept

132

an oral communication as defined in the statute, one that is pro-
tected.

The oral communication definition states that there must be a
reasonable, justifiable expectation of privacy before communication
is protected. The Florida courts have addressed this type of issue in
a couple of circumstances.

One was the Chandler v. Florida case which my law partner, Mr.
Munroe, prosecuted for the State of Florida back in the 1970’s. Mr.
Chandler was a police officer and he and his partner were involved
in having some communications with each other over radios, and
the courts ruled that in fact they had no expectation of privacy
when those were intercepted.

Subsequently, in 1985, there was a Florida Supreme Court opin-
ion which dealt specifically with this section 2 definition, and went
into great detail talking about that. And Incerienno, I-n-c-e-r-i-e-n-
n-o, State v. Incerienno, 1985, discussed this section very carefully.

I read the circumstance that Mr. Hamel is in Virginia, that in
Virginia he has no expectation that his calls will not be taped be-
cause, in fact, in Virginia it is allowed that you have one-party con-
sent.

Because — I would also note, by the way, I don’t think there is
any tort liability to Mr. Black or Wackenhut for this, and the
reason is that the Restatement 2nd of Conflicts of Laws which is
the general document which determines — I mean, it is a body of
law accumulated by some of our leading scholars to say what the
law is. In the Restatement 2nd, they deal with the controlling law
that deals with issues of invasion of privacy. And they say that the
locus of the party whose privacy is invaded is the State where the
law will be determinative of which State’s law controls.

The net result of all of this outside of lawyer talk is that Virgin-
ia law controls and it is not a violation.

Mr. Young. Let me admonish you a little bit. When I ask the
next questions or questions that I ask you, let’s not go into a long
litany because it gets very complex, and I doubt if anybody under-
stood the answer.

The answer is, no, it is not illegal in Florida.

Mr. Richey. It is legal to tape-record the call, correct.

The Chairman. It is not illegal in Florida, or is it your opinion
that it is not illegal in Florida?

Mr. Richey. I believe it is not illegal in Florida, and it is my
opinion, and I believe my opinion is 100 percent correct. I have
done probably more of this than anybody down there.

Mr. Young. We also heard today, and the reason I bring these
questions up is because we are here to find out a lot of accusations,
a lot of insinuations, a lot of discussion, a lot of rhetoric about
whether laws were or were not broken. We’re supposed to find out.
A lot of discussion about toll records, telephone toll records, wheth-
er it is lawful or unlawful to collect toll records. And if they were
collected, or purchased, or obtained, in that case, what is the law in
Florida?

Mr. Richey. I think it is in the law in Florida and across the
country, as far as I know, that it is legal, there is no violation of
the law. If you want me to explain, I will explain.

133

Mr. Young. Make it very short. I know lawyers are paid by the
word, I realize that.

Mr. DeFazio. If the gentleman will yield for a moment, because
it refers to my line of questioning. The question really revolved
around legally or illegally obtained. That is, if the phone company
has a policy to sell them, that is one thing, and if they are pur-
chased in that manner, and that was part of the previous — so you
might address whether or not in Florida the phone company regu-
larly sells such records and through what process. That is just part
of the

Mr. Richey. Sure. Let me try and answer that question in the
following manner.

For at least the 10 years I have been in private practice, private
investigators all over Florida, and to my understanding from other
attorneys practicing law, throughout the United States, private in-
vestigators throughout the United States, have had access to these
toll records. The telephone company knows this. They have known
this, as far as I know, for more than a decade.

During the course of time that they have known this, I am not
aware of them taking any steps whatsoever to try and deal with
this if they view it as a problem. And the reason, my suspicion, my
belief, my gut feeling of why not, is because they have their own
interests in the economic future of dealing with toll records, just as
people are dealing these days with information that is accumulated
from credit card purchases and other such kinds of things.

And I think that the telephone company may protest a little bit
about what their interest is, but to my knowledge they have never
done anything about it. I suspect they have contractors and subcon-
tractors they deal with who get this material and distribute it with
the knowledge of the phone company, and thus with the acquies-
cence of the phone company, and thus they have no proprietary in-
terest in this information because they allow it to wander out in
the community, and to my knowledge they have for over a decade.

And there are several Court of Appeals decisions, Federal Court
of Appeals decisions, saying that 47 United States Code Section 605
does not relate to toll records and it is perfectly legal to have them.

Mr. DeFazio. That is not a clear answer.

Mr. Young. Wait. You have your time. You can get back to that
later.

I don’t believe this is the first/time toll records have been pur-
chased or have been available to anybody. I happen to know this
has happened before. In the campaign efforts, I am sure some of
the Members in this room may have been involved in toll records,
too.

Some comments were made about whistleblowers and Federal
whistleblowers and how they are protected. Are you aware of any
Federal whistleblower statute which authorized the misappropria-
tion of confidential privileged documents as a method for disclosing
possible unlawful activities?

Mr. Richey. Absolutely not. The whistleblower statutes have not
abolished the Ten Commandments in this country. It is absolutely
improper for people to be stealing records of this type. They are
not covered by the whistleblower statutes.

134

If somebody wants to report something that a company is doing
wrong, the Congress in its wisdom, many of the State legislatures
in their wisdom have provided excellent means and methods to pro-
tect those people to see that their jobs are not in danger. All they
have to do is follow the rules. And following the rules doesn’t mean
stealing attorney-client privileged communications.

Mr. Young. There has been some indication Alyeska documents
are being misappropriated by someone within the company’s legal
department. That was brought up today, about whether this docu-
ment was stolen and did they have a right to recover it. Does the
policy of the company have a secret policy, or do you think a claim
by an in-house company attorney, that his or her disclosures were
protected conduct under whistleblower statutes, would be credible
defense in proceeding before a State bar association on an ethical
violation?

Mr. Richey. I think the person might also have criminal expo-
sure, in addition to a State bar problem. But I wouldn’t want to be
defending somebody in front of the bar with that as my defense.

If they had stolen attorney-client privileged communications and
delivered them to third parties, I think that is a clear violation of
law.

Mr. Young. Even if they hadn’t delivered them to third party,
receiving stolen property from party one to party two, that is not
really legal either, is it?

Mr. Richey. It is a crime to be in possession of stolen property
knowing the property to be stolen. So if you receive property from
someone and you know that property is stolen, you are in fact a
fence. You are dealing in stolen property, and there are different
kinds of ways to describe it in different statutes, but the person
who receives the stolen property is just as guilty as the thief.

Mr. Young. Now, you are a Miami lawyer, I take it.

Mr. Richey. Yes, sir.

Mr. Young. Now have you reviewed Alaska State laws and their
whistleblower protection, and — it goes back to — there was some as-
sertion today that really these documents weren’t being stolen
from Alyeska, they were in the possession of individuals, they were
made available to a second party who made them available to a
third party, but they weren’t really stolen. Have you studied State
law, Alaska State law, on this?

Mr. Richey. I have not studied Alaska State law. I think factual
matters are important. The factual process by which this happens
is important as to whether or not there would be a misappropria-
tion or a theft.

But I am not aware of any whistleblower statute or the concept
of any whistleblower statute which encourages people to take docu-
ments and give them to third parties other than agencies. Every
whistleblower statute I am aware of provides that people must go
to an Agency of Government, not to a newspaper, not to a televi-
sion station, not to an environmental activist or environmental
group.

You deliver these to Government. Otherwise, there is no whistle-
blower protection.

Mr. Young. I have no further questions at this time, Mr. Chair-
man.

135

The Chairman. Mr. Gejdenson.

Mr. Gejdenson. Thank you, Mr. Chairman. You are a great
lawyer. Everything your client did was legal and when they steal
phone records there is some miraculous path that the phone
records can get to your clients without breaking the law.

Mr. Richey. I respectfully disagree, sir; I think that this has been
going on for 10 years.

Mr. Gejdenson. I'm sure you disagree. There was this miracu-
lous path for phone records that might be sold. All kinds of ways
they can get there. That is perfectly legal. Do you think it was
legal to steal mail out of this gentleman’s home?

Mr. Richey. I think there is a dispute over how that mail was
taken and its condition.

Mr. Gejdenson. If somebody took mail out of the gentleman’s
home in question; is that illegal?

Mr. Richey. As I understand the facts, the facts that are before
this committee, the material that was taken

Mr. Gejdenson. I am not asking you about this case. You are a
great lawyer. You can answer theoretical questions.

There is a man with a house. It is his house. He invites somebody
into his house. That person takes a piece of mail out of his house.
Is that illegal?

Mr. Richey. It depends on whose property the mail is. For in-
stance, if the contents of the envelope are the property of

Mr. Gejdenson. What if the mail is not open and it is just sitting
there on my desk, can you take it?

Mr. Richey. Let me tell you, you do so at your own risk. But
whether or not that is a crime depends upon the contents of that
envelope.

Mr. Gejdenson. Let me go on here. Mr. Miller will tell me I am
out of time in a second.

You were in the State police? What was your job in Alaska?

Mr. Wellington. I was director of State Troopers.

Mr. Gejdenson. Somebody steals something, you call the police
first generally?

Mr. Wellington. I think it depends on what the situation is.

Mr. Gejdenson. On the other hand

Mr. Wellington. Wait a minute. You are asking me to give a
hypothetical question.

Mr. Gejdenson. I am asking you what the general rule is when
somebody steals something from you. My bike is gone, I call up the
police department. They say, I am sorry we can’t do anything
about bikes, we have too much crime in this city. What do you do
when somebody steals something? Do you hire a detective agency?

Mr. Wellington. That is a prudent method.

Mr. Gejdenson. Why don’t you go to the police? These are docu-
ments your counsel here claims are stolen property of the compa-
ny. Why don’t you call the FBI or police or somebody? Is that
option reviewed and you dismiss it?

Mr. Wellington. Basically you have several options before you.
The option that we took was to attempt to determine whether or
not and how the thefts of our confidential, private — attorney-client
and private documents were leaving.

136

As I said in my statement had we been able to determine who
was doing it, how they were leaving, we were prepared to go to the
appropriate law enforcement agency with that information, but we
felt it was prudent and in my professional experience as a corpo-
rate security manager to attempt to look at the problem internally
before we went to law enforcement. A totally acceptable practice.

Mr. Gejdenson. That is fine. I am not condemning it. I’m just
asking if it is such a clear case of theft, you now know for several
months who the players are, why you didn’t go to the police at any
point?

Mr. Wellington. I made a professional decision to work the case
up — we were headed that way, sir.

Mr. Gejdenson. Mr. Richey, why didn’t you go to the police once
you found out who the culprits were?

Mr. Richey. Let’s start with why people use self-help to begin
with. There are some very important reasons which are enacted
into policy by this Congress and by the legislatures of the various
States.

There are many private attorney general statutes out there.
There are private civil theft statutes in which you go out and you
seek treble damages. You are encouraged because your investiga-
tive and attorney fees are paid; the same with RICO statutes; the
same with trademarks. Almost all the theft of trademarks in this
country is enforced privately. The reason is because the FBI and
police don’t have time to deal with it very much.

Mr. Gejdenson. Thank you. Mr. Wellington, what were you
afraid of happening — I think the chairman asked some of these
questions before— with these documents. Was the company sitting
there saying we are afraid these are terrorists, they are going to
come in and interrupt our supply?

Did the company say this could give us bad publicity because we
are polluting the water or doing things wrong or they may be able
to make it look like we are doing things wrong? What were you
afraid of? What were you trying to deal with, besides the security
situation? We generally like to control things that go in and out of
our offices.

Mr. Wellington. I think that’s the basic — you hit it right there,
sir. We have a right as a company, as you have a right as an indi-
vidual, to assume your legal documents are going to be maintained
in your possession and not be distributed to the news media or any-
thing else. Our concern additionally was — mine was as security
manager for the company — I didn't know what else might be find-
ing its way outside our corporate headquarters and where it might
be going.

As the chairman indicated we are transporting 25 percent of the
domestic oil supply of the United States.

Mr. Gejdenson. Mr. Hermiller, if you were working for a compa-
ny and you felt that the company was involved in something ille-
gal, was against the laws of our land, if you weren’t confident that
the Federal agencies involved were going to follow up adequately,
maybe they were involved in it like in the case of Iran Contra, or
something, that not only was your company breaking the law, but
the Government might be breaking the law or the Government
might not be interested in following up, what would you do?

137

Mr. Hermiller. First of all. Congressman, I would like to answer
your last question that you didn’t ask me but asked the other two.
I wish to hell we had gone to the police.

Mr. Gejdenson. OK. Thank you.

Mr. Hermiller. But beyond that, obviously, the whistleblower
statutes have been defined here.

Mr. Gejdenson. The court case is apparently not clear. There
are some courts that have found you can go to the press with this
stuff. There is a mixed review out there now. It’s not clear.

Mr. Hermiller. I can speak for the Alyeska Company. I think
there are plenty of avenues inside the company to seek redress and
indeed if that redress is not to your satisfaction or to my satisfac-
tion if I were the affected individual, as was mentioned here,
indeed if it were a health, safety, environmental concern and he
went to the appropriate external agency, be it OSHA, EPA

Mr. Gejdenson. Or the Congress.

Mr. Hermiller. As far as I am concerned, that is an acceptable
activity.

Mr. Gejdenson. So it seems to me this gentleman did end up
going to the appropriate response, the Congress is a part of our
Government and these documents, at least some of them, ended up
coming to Members of the Congress, at that point you stopped the
investigation; is that correct? I am a little confused on the time.

Mr. Hermiller. Are you speaking to me, Congressman?

Mr. Gejdenson. Yes. Once you figured they were going to the
Congress, is that when you stopped the investigation?.

Mr. Hermiller. Absolutely not. I can’t believe, Congressman,
this committee or Chairman Miller would accept attorney-client
privileged documents. I just can’t believe that you would accept
those.

These documents were related to sensitive ongoing litigation we
were involved in.

The Chairman. Do you have any evidence we have accepted
them?

Mr. Hermiller. I have none. I said I can’t believe you would
accept them.

Mr. Gejdenson. All these documents weren’t attorney privilege.

Mr. Hermiller. Congressman, there are two kinds of documents.
The documents that had been leaked over an extended period of
time, refer to them as operating documents, relating to the oper-
ation of the pipeline, the terminal. Those kind of documents we
had been aware were getting out of Alyeska.

I will be quite frank with you. I was very new at Alyeska. I had
been around 6 months when this particular issue came up. The
thing that triggered my concern, as I said before, was the fact these
were sensitive documents protected by the privilege.

Mr. Gejdenson. What was it — once you knew who did it and
where it was going, what was it that had you stop the investiga-
tion? It was your board members that came in and said, that’s it,
shut it down, we don’t want to do this anymore.

Mr. Hermiller. First of all, just to review this thing a bit for
you, we progressed this investigation through the summer. I will
tell you I was extremely sensitive when the name of the chairman
came up in this thing, that if in any way Mr. Black involved any

138

Member of this committee or any member of this staff, this thing
was to be shut down. I didn’t care.

That is exactly what I passed on to Mr. Wellington. No way were
we interested where Mr. Hamel was taking those documents — I
shouldn’t say that. We were interested, but in no way if those docu-
ments or in any way were being passed on to this committee or im-
pinging on this committee, I wouldn’t touch that with a 10-foot
pole.

Then we went on — I will answer your question — then we went on
out at the end of August. I was absolutely convinced we were not
going to identify the source in Alyeska. I was absolutely convinced
of that. I was convinced there was another source out there that
was passing the attorney-client privileged documents on to Mr.
Hamel.

At that point I conferred with Mr. Wellington. We agreed, this
thing is not going anywhere. We are going to go to the owners and
discuss it with the owners and that is what we did on September
25.

Mr. Gejdenson. Thank you.

The Chairman. Mr. Taylor.

Mr. Taylor. Thank you, Mr. Chairman.

Mr. Hermiller, I have gotten hernia of the eyes going through
this wood pulp. Every time I think I read all of it, I get another
stack of papers put before me. Let me summarize a bit.

As I understand your company was missing documents. Some of
those documents involved the attorney-client relationship.

Mr. Hermiller. That’s right. I distinguished between two types
of documents: one of them is attorney-client privileged.

Mr. Taylor. You have documents I am sure in your company
that deal with trade documents, procedures, various documents
that are assets of your company, part of the value of your compa-
ny.

Mr. Hermiller. That s correct.

Mr. Taylor. Were any of those missing or did you know at the
time?

Mr. Hermiller. We knew many of those documents — for exam-
ple, many of the manuals Mr. Wellington referred to had been
missing from Alyeska. We were aware of those things, yes.

Mr. Taylor. The — those plans and documents could have also
been used in sabotage that was referred to earlier. I think Mr.
Wackenhut mentioned engineering plans and other things.

Mr. Hermiller. I am not familiar with the precise documents.

Mr. Taylor. But a considerable source of documents of a variety
of types were missing and obviously with that kind of leak you
knew that almost anything could sift out of the company in that
way.

So you were concerned with stolen corporate assets.

Mr. Hermiller. That’s correct.

Mr. Taylor. Mr. Wellington, you as the security head had to be
concerned about — in my part of the country we have a group of
folks there that believe trees have feelings, so they go around driv-
ing spikes in the Forest Service trees, and of course, we have had
people injured and I am sure someone is going to be soon killed,
because when you try to cut a tree, you don’t see the spike and it

139

will fly back, and you’ve got real problems. Those folks are dedicat-
ed toward trees having feelings and they will not stop at murder to
see that trees aren’t cut.

When it happens on the national forest there is a whole body of
law enforcement inside the Forest Service that can investigate
that. When it happens on private land, we have two choices. We go
down to the sheriff at Hanging Dog and say would you investigate
this — Hanging Dog, the far end of the district, and the sheriff has a
county that’s 200 miles across, he has three deputies, and you
know, that sort of thing, and you give that to him and that sort of
stays on his desk because he doesn’t have any idea where it goes,
so you go after a private source.

If I wanted to cause an enormous oil spill, either on land or in
the water in your part of the area, how helpful would it be for me
to have plans to your pipeline, the pumping station, your proce-
dures, the engineering drawings, those sort of things; would that
help me at all?

Mr. Wellington. Absolutely sir. We are very careful. We have
security around all of our operational facilities, armed security, all
the time, 24 hours a day around all optional facilities. We are very,
very concerned.

Mr. Taylor. Spend a lot of money trying to protect that?

Mr. Wellington. During Desert Storm we increased security
and spent an extra $3 million in 2Vz months.

Mr. Taylor. If I broke through that security because you were
careless, because you didn’t follow up on missing plans and missing
documents, how high would the public in Alaska hang you, as well
as your own company because of your dereliction?

Mr. Wellington. Probably wouldn’t be here today.

Mr. Taylor. You have a very substantial reason for that. When
you found these documents were being stolen, you commenced to a
plan as you outlined in your statement to get the documents back,
to find out who is stealing them if possible and stop the theft. I un-
derstand that you were advised that your investigation was legal
by counsel.

Mr. Wellington. Every step of the way.

Mr. Taylor. All right. So we are at that point in the investiga-
tion.

Now, Mr. Richey, you got involved with this somewhat when the
ordinary course of this investigation followed through and they
found that one of the conspirators in the theft or who appeared to
be — or in fact himself said he was involved in the documents being
taken that some of these stolen assets of the corporation were

given to a congressional committee. That was alleged by one of the
co-conspirators in the theft. That turned up in the investigation
and the folks came to see you at that time, did they not?

Mr. Richey. Yes, sir, they did.

Mr. Taylor. Of course they didn’t know what to do about that. It
is not customary for a body of Congress to be the recipient of stolen
property or participate in that. We are a powerful body. We have
subpoena power. We have the power to direct regulatory agencies.
We have the power to direct investigative agencies.

It is beyond most of our comprehension that this body needs to
resort to either accepting or encouraging the stealing of property

140

for us to carry out our duty. But when you found that might be a
possibility — and how did you come upon that or how did your cli-
ents say they came upon that thought?

Mr. Richey. Mr. Hamel told them that’s what he did. Mr. Hamel
made a number of statements. As you noted, he confessed to the
fact he knowingly possessed stolen documents. He confessed on the
tape to the fact if they would pay him $18 million he would stop
stealing their documents.

The Chairman. Do you have a cite on that tape?

Mr. Richey. I saw that tape myself and I haven’t seen it since
that day in Wackenhut’s office.

Mr. Taylor. Mr. Chairman.

The Chairman. Go ahead.

Mr. Taylor. You read the tapes and transcripts — seen the tapes
and read the transcripts and so forth?

Mr. Richey. No, sir, I have not looked at the tapes or transcripts
since — I never looked at any transcripts because they were not
ready for me to look at. I looked at tape recordings in my office
and Wackenhut’s office.

Mr. Taylor. One of the transcripts implies the committee was
willing and even anxious to get stolen goods. I think that is in cas-
sette F2R412110, and I ask the committee if they want to pass it
about, this is available to us. And I won’t read his whole testimony,
but that he in general alleges that he is presenting this committee
with material which clearly is stolen material, referred to as, those
are dynamite documents, how in the hell did you — then he said
well, I got them but we shouldn’t tell how they got out of here.

Clearly, he knows they are stolen documents. He talks about who
he had to go to in the committee to get them or pass them by and
that sort of thing. He also alleges he has shown these to the attor-
ney general of Alaska, but he said you know, sort of nobody wants
to know that anybody knows they have looked at them, but they
looked at them. That is in that section of the transcript.

So here Mr. Hamel is alleging the committee not only is accept-
ing the stolen documents but is anxious to get those documents.
Wants to see more. Wants to see some he hasn’t even shown them
yet. Do you remember that? Do you recall that?

Mr. Richey. Yes, sir, and that upset me very, very much. It upset
Mr. Wellington very much and we were very unhappy with the ex-
istence of that conversation because our position was we wanted no
mention of Congress or this committee or anything to do with it.

That and a series of allegations that Mr. Hamel made about his
relationship with Mr. Petrich upset us very, very much. We could
not imagine how that would be anything but destructive to our
client if that kind of information came out.

Mr. Taylor. I can see why you would be concerned and not know
what to do. If you found a congressional committee accepting stolen
documents and even perhaps encouraging stolen documents, you
might wind up in a hearing where you would have to appear before
the public.

Mr. Richey. Congressman, I think I predicted that in May 1990.

Mr. Taylor. Let me ask you one other area. In one other section
in cassette F2R4122113 Mr. Hamel tells Mr. Black to remove the
attorney-client privilege headers — that is, that heads the files —

141

from the Alyeska stolen documents. These documents have been
stolen, they are now in possession of Mr. Hamel and he is directing
Mr. Black before he passes them on, or before Mr. Hamel passed
them on to the committee that he should remove those attorney-
client privilege headers from that.

Obviously, he wasn’t removing them because he didn’t like the
names on them.

Mr. Richey. That is pretty good evidence of what is known as
criminal intent.

Mr. Taylor. I have heard that.

It talks about taking them off each page and recopying them and
cutting each section out so that he passes them on.

Now you are an attorney of course and if you — I don’t care what
your motive was, whether you were a committee counsel or you
represented the church or what other — who your client was, if I
come over and say, Mr. Richey, I have these documents I would
like for you to review, they would be very helpful for your cause.

By the way, we have to take the attorney-client statements off
the top, what would you as an attorney be guilty of for accepting
that type of attorney-client privilege documents?

Mr. Richey. The Code of Professional Responsibility, American
Bar Association and every State of which I am familiar, the code of
ethics for lawyers specifically provides that lawyers have an obliga-
tion as attorneys to take all reasonable steps they can to prevent
themselves from intruding into the privileges of others, including
others not their clients. That is the attorney-client privilege.

We are talking about something very special here; we are talking
about the attorney-client privilege. It has long been stated by our
courts and the courts of Great Britain that our legal system cannot
function as it is supposed to in an adversary system without the
protection and maintenance of the attorney-client privilege. It’s
something very sacred; is being stolen here and misused.

Mr. Taylor. So in addition to it being immoral and in addition to
it being illegal from a statutory sense, it is also a violation that
might get you defrocked as an attorney if you were a member of
this staff and a licensed attorney and you were participating in ac-
cepting those types of documents knowing they violated the attor-
ney-client privilege.

Mr. Richey. Yes.

The Chairman. Will the gentleman yield?

Mr. Taylor. One moment Mr. Chairman. I have one other area I
would like to go into. It came to me in reading late the other
night — and most of the reading of those tapes puts you to sleep in a
hurry, but there were a few things in there. F2R412079, a discus-
sion between Mr. Hamel, Mr. Black regarding Mr. Hamel’s settle-
ment with Exxon.

Mr. Hamel believed that Exxon knowing that he is involved with
the Ecolit will expedite his settlement payment. That is sort of a —
if he can get them in a tight enough spot some way by divulging
whether it be a trade situation, something that might put them in
a bad way attorney-clientwise, whatever, he could use that to,
should I say, blackmail his settlement.

And that is essentially what this F2R412079 does in this. He
points out that — let’s see if I can find it — he says not this one, this

142

is the one, not this kind of stuff I have done it — and there is a
barnyard word there and another barnyard word, now take me
back to what you were saying. We covered no — when I think they
know it’s me that’s done this, they are going to pay me quicker.
That’s Mr. Hamel from the transcript which refers to the fact that,
when this stuff starts showing up, it is going to have an effect on
his personal litigation problems that he has, whatever they are.

Mr. Richey. Yes, sir, what it is as I understand it from my view
of the tapes and from my view of the Heller Ehrman letter to
Alfred Smith from May 1, 1990, on a conversation with Julian
Mason regarding Mr. Hamel. This is part of the record, Mr. Pat
Wellington had described this information to me at our first meet-
ing, the first time I met Pat Wellington, and it is abundantly clear
to me what was going on here was extortion by Mr. Hamel, that
what he had in mind was he wanted the oil companies to pay him
a lot of money. He was utilizing alleged interest in the environ-
ment to further that. He is a little bit like a bank robber who on
the way to rob a bank, stops and helps an old lady across the street
and then wants credit for doing a good deed while going over to rob
the bank.

He is utilizing the environmental movement, he is selling the
name of a Congressman and the Congressman’s staff all over town.
And he is doing that in furtherance of his own economic interest
and doing it in a way that is clear extortion, clear use of stolen doc-
uments.

Mr. Taylor. That may — from what we see that is true. The thing
that troubles me, Mr. Chairman, and let me in closing say that we
have been beating up on a giant oil company — that is probably one
of the favorite things you might like to do, some folks. As I said in
the beginning it is sort of a congressional dream.

The thing that troubles me about this matter is the committee or
its staff or perhaps one or both of us in this matter hands are not
deem in this function. We have been asking lots of questions about
what the detective firm did in this and others did in this and there
are criminal statutes and civil opportunities for the public to be
protected in that. And we can take those matters to the proper law
enforcement agents and the people involved — the individuals in-
volved can do that. They can be protected, but who protects the
public if we, as a congressional committee, are participating in
these types of illegalities? Immoral, illegal, unethical.

When we do that, who protects the public unless we focus on
what this committee or its staff or others may have done in violat-
ing the law or at least at a minimum in creating unethical and im-
material moral acts?

Thank you, Mr. Chairman.

The Chairman. Mr. DeFazio.

Mr. DeFazio. Well, I understand that we attempt diversionary
tactics all the time, but let us get back to the panel at hand.

Mr. Richey, the words you used regarding the phone records,
given the first panel, we still haven’t gotten to the bottom of this.
You talked about the phone company having access. The companv
had access. Your client had access. Had access is kind of — I don r t
know what that means. You didn’t say they legally obtained or
purchased, they had access. I want to restate — you said the phone

143

company knows this. That it was with the knowledge and acquies-
cence of the phone company.

Does the phone company in Florida sell the records in question,
the toll records in question? Do they have a process through which
they are obtained other than under warrant, do they have a policy
of selling them, renting them, leasing them or gifting them to pri-
vate investigators?

Mr. Richey. I am not aware of any. And I have never asked, be-
cause I have never been

Mr. DeFazio. Because you don’t want to know perhaps.

Mr. Richey. No, sir, that’s incorrect.

Mr. DeFazio. You don’t want to know if it is legal or illegal. You
are an attorney and you gave us their song and dance about the
documents from Alyeska and the receiver of stolen property is just
as guilty as the thief.

You don’t want to know if your client received these things legal-
ly, or if there is any legal means through which they can be ob-
tained. Are you as guilty as the thief then too because you are ac-
quiescing here? You have a great grin and you are a clever guy.
Answer the question.

Mr. Richey. May I answer your question?

Mr. DeFazio. Do you have knowledge of a lawful process, a proc-
ess where they can be purchased, leased, rented or gifted or other-
wise legally obtained by your company?

Mr. Richey. Those are not the exclusive means of getting things
lawfully. If people in fact make things available to their contrac-
tors and subcontractors and allow those people to pass them out
and sell them, then they are waiving their proprietary interest in
those matters and nobody

Mr. DeFazio. Are you aware the phone company is doing that
knowledgeably?

Mr. Richey. I believe the phone company has known for years
with

Mr. DeFazio. You believe. You would think you would check a
little more into the legality of this if you are going to accuse people
receiving stolen property as guilty as the thief. You wouldn’t want
to misrepresent those people or mislead them.

Mr. Richey. Well, I certainly feel very comfortable with the le-
gality of what my client did in getting these materials because
there are several U.S. District Court of Appeals decisions right on
point which say that possession of these things is not improper.

Mr. DeFazio. Not improper.

Mr. Richey. It’s OK.

Mr. DeFazio. Depending on how they are obtained.

Mr. Richey. No, sir. It’s OK to have them no matter how they
are obtained.

Mr. DeFazio. So if I am an employee of the phone company and I
copy these things against company policy, and I provide them to
your client, that is legal and fine for your client.

Mr. Richey. It is a serious problem for that person at the phone
company; it is no problem for the client. Congressman, may I
answer the question?

The Chairman. Let him answer.

144

Mr. Richey. May I answer your question? I have been called here
to answer questions. Let me answer. I am not aware, I have never
heard of it being a situation where an employee was wrongfully at
the telephone company photocopying them, and like I said, to my
knowledge every private investigator in the United States for a
decade has had these.

My understanding is the phone company is aware of it. My belief
in my gut is they don’t want to do anything about it because they
have their own economic interest in manipulating these for com-
mercial reasons in the future. If they wanted to do something
about it, all they would have to do is come to this Congress and/or
any legislature and ask this be made illegal and that it be protect-
ed. They don’t want to and they don’t care.

The Chairman. Will the gentleman yield?

Mr. DeFazio. Yes.

The Chairman. You obviously engage in this practice much more
than we do. The formal position of the phone companies is they do
not make this available and they disagree with it being made avail-
able.

Mr. Richey. Yes, sir.

The Chairman. Your suggestion is somebody is at a Xerox ma-
chine and they photocopy and make it available to somebody and
that is fine?

Mr. Richey. That is not my position at all. And I’ve never
thought that that was what probably happened. The telephone
company has all kinds of subcontractors doing all kinds of things.
And I understand they make these records available to other com-
panies. That may be incorrect.

The Chairman. In the ordinary course of their business.

Mr. Richey. In the ordinary course of business.

The Chairman. With the expectation, you are suggesting, they
will then be sold by those people or disseminated in some fashion —
given, sold or rented?

Mr. Richey. With the knowledge it has been happening for years
and it is ongoing. And that they have never done anything about it
and there are plenty of doctrines of law to the following: Proprie-
tary information is not proprietary because you put a stamp on it.
It is only proprietary if you act in a way that it is secret and confi-
dential and you care about it. Otherwise it is not proprietary infor-
mation.

The Chairman. Like an attorney-client privileged stamp on a
document does not necessarily make it attorney-client privileged.

Mr. Richey. That’s correct, if in fact the parties do not treat it as
attorney-client privileged, it is not. It is the same general theory
and follow-through.

The Chairman. Uh-huh.

Mr. Richey. If you have a question, Congressman, I would be
happy to answer it. I see you smiling.

The Chairman. No, I find it interesting that what you are sub-
mitting is a brief to this committee on why you think it is not in
violation of the law. It is your opinion their actions allow it to
happen, and you believe these actions would be in compliance with
the court of appeals and so forth.

145

That is not necessarily the fact. As well informed as it is, it has
not been the fact. Reading the transcript of Mr. Hamel, nowhere is
it said these are stolen or otherwise. He says they are “hot pota-
toes.”

Mr. Richey. I respectfully suggest that the court of appeals opin-
ions are very clear that there is no violation here by the company,
by my clients.

Mr. DeFazio. If I can reclaim my time. How to Get Anything on
Anybody — a great little book I saw yesterday for the first time. [See
page 402.]

Mr. Richey. I am not familiar with the book.

Mr. DeFazio. Here is the assertion of this individual who pur-
ports to be the most dangerous book ever published.

Mr. Richey. Congressman, if I may object here, I object to being
cross-examined on a document I have never heard of in my entire
life, never seen.

Mr. DeFazio. I am going to read you an assertion and ask your
esteemed legal opinion since you’ve given me another one for free.
“All of these methods rely upon the investigator passing himself
off as a person who has a right to said information.” This is under
obtaining telephone company names, listings, and unlisted num-
bers.

Mr. Jordan. Could you give us a page reference of that?

Mr. DeFazio. Certainly, page 177.

The Chairman. Probably soon to be a best seller. The guy was
struggling before this hearing.

Mr. Richey. Give me a moment.

The Chairman. One moment. Do you have that page?

Mr. Richey. Yes. Can you give me a moment to look at this and
see what it is?

The Chairman. Sure. Do you have the page in question?

Mr. Richey. Yes, sir. I’ve looked at it. Thank you.

The Chairman. We will make you a gift of the book.

Mr. Richey. I don’t really need it.

Mr. DeFazio. I was just worried about copyright violations.

Mr. Richey. Yes, sir.

Mr. DeFazio. I guess what I am trying to say, perhaps this fel-
low’s book is hyperbole and so on and so forth. I will need to check
with the Regional Bell Operating Companies [RBOCs] and AT&T
and others and test your allegations. Luckily, I am seeing officials
from the RBOCs tomorrow night. I don’t think we will get to that.
We have a letter from AT&T right here.

Mr. Richey. I doubt, Congressman, they are going to admit to my
theory; they are not objecting to this because they have their own
interest in disseminating this in the future.

The Chairman. You don’t know that for a fact.

Mr. Richey. No, sir, I told you that was my gut feeling.

Mr. DeFazio. There is a document of record here. Since we have
gone so far down this path, let’s provide this to the witness dated
October 25, 1991, it has no number. [See page 603.]

Mr. DeFazio. I think the pertinent paragraph is the third on the
first page. Bottom of the page last, it is two lines.

Mr. Richey. I am sorry, sir.

146

Mr. DeFazio. I think the sentence which says, “In addition to the
records of billing data maintained by AT&T, such records often are
also maintained by local exchange carriers which in many parts of
the country serve as AT&T’s billing agent for a number of long dis-
tance services. AT&T and the local exchange carriers agree that
the local exchange carriers will treat individual customer billing
records related to long distance charges as confidential and will not
disclose such records at the request of third parties unless appro-
priate legal process is received.”

That is a statement of the main operating company whose
records were obtained, AT&T. I guess there seems to be a problem.
If that is the policy of the company, you are saying despite their
public assertion of this policy that they are lying, that in fact they
acquiesce in the obtaining of these records through other means.

Mr. Richey. No, sir I am not saying that at all. This letter does
not address whatsoever my point. Having a policy you say and put
a label on something that it is proprietary information does not
make it proprietary information. You have to treat it as proprie-
tary; you have to enforce your proprietary rights. You have to care
enough about it to go through a series of steps to maintain the pro-
prietary nature of the information.

They stated this to you, but it doesn’t say what their enforce-
ments procedures are. It doesn’t say the means and mechanisms
they take to deal with this; it doesn’t say they have taken steps to
make legislature change the law to make what is now legal crimi-
nal. This letter doesn't say anything, not to a lawyer anyway. A
lawyer probably wrote it, by the way.

Mr. DeFazio. So, your message to the people of America is, be-
cause perhaps we will get AT&T’s attention and they will respond
to you with some vigor is that all records of all long distance phone
calls made on the AT&T system in America are routinely available
through the acquiescence of AT&T; that is your assertion.

Mr. Richey. And, in addition, a lot of information is commercial-
ly available to people. Magazines sell their subscription lists, all
kinds of things like that happen in the commercial arena. Credit
card companies are now pooling who buys how many green ties at
what stores so that they can do a credit profile on people and not
just that; so they can determine who they want to send mail-out
catalogs out to.

Mr. DeFazio. That is correct, but American Express has not
made the assertion they won’t tell people about the green ties I
purchase.

Mr. Richey. I see they state their policy but I don’t see them
making any assertions they are interested in doing anything about
it.

Mr. DeFazio. I think we will direct some response from AT&T to
your assertions. If we could, just a couple other points, Mr. Chair-
man. The previous questioning went quite long so I hope that you
extend the same privilege.

I came in a little late, so I want to make sure the panel was
sworn. They were sworn, okay, because Mr. Hermiller said some-
thing which stretched my credibility; he said he held Congress in
the highest respect. Puts him in a minority these days according to
the public polls.

147

Mr. Hermiller. And this committee in high regard.

Mr. DeFazio. Thank you, Mr. Hermiller.

The Chairman. The phrase used to be minimal high regard.

Mr. DeFazio. Now the — -just the document which grabs your at-
tention which began this whole sorry affair, which now you say
you wish had never happened and you wish you had referred to the
appropriate legal authorities at the beginning — that would have
saved everyone a lot of time here — was a document shown on the
Scottish Eye program and the document itself was, according to the
press reports I see, not a particularly startling document, yet it
triggered this whole series of events.

You were aware that operating documents were sort of regularlv
misappropriated, stolen, whatever, and until this time you dicbvt
take any action and somehow this triggered your action. I guess
that brings about two questions: One would be relating back to Mr.
Richey, if you previously knew operating documents were being ob-
tained and you weren’t doing anything very vigorous about it, I
guess you would be in the same position AT&T, you kind of acqui-
esce and it is OK to steal them because you have a policy, but what
the heck.

That would be the first part if you can respond to that, and why
this particular document triggered it. Was it because of the sensi-
tivity of this? Because it was the straw that broke the camel’s back
or was it because it gave you some particularly attractive targets
and was Mr. Hamel the only target of this investigation, because
apparently an environmental group had obtained this document
and had made it available.

Mr. Hermiller. The first part, Congressman, as I said, I had
been at Alyeska about 6 months when we initiated or actually the
client privileged documents disappeared. There had been a history
of the loss of what I described as operating agreements or operat-
ing papers — operating documents. There had been investigations
prior, at least internally to the loss of those documents, as Mr. Wel-
lington I think described earlier.

The document that did trigger my interest, as 1 said, was a sensi-
tive document. My lawyers advised me that it was a very sensitive
document, related to the ongoing Exxon Valdez litigation. I think
beyond that, seeing that this one document had disappeared from
Alyeska, there was great concern that a whole series of documents
had disappeared from Alyeska.

And, indeed, within a short time upon the commencement of this
investigation, Mr. Hamel did brag that he did have the rest of the
documents that had been prepared by the outside law firm in-
volved in this litigation.

Mr. DeFazio. OK. Mr. Richey, if we could get back to your docu-
ment which says privileged attorney-client information, privileged
work product information, confidential, personal, dated May 22,
1990.

Mr. Richey. Just one moment, please.

Mr. DeFazio. It is attached to the — in my case — to the memoran-
dum to Mr. Wellington from Mr. Black and it is on the back of
that. [See page 453.]

The Chairman. The gentleman has 1 minute.

Mr. DeFazio. OK.

148

Mr. Wellington. It is what sir?

Mr. DeFazio. I have only 1 minute left. Mr. Chairman, I will
yield back the minute and do a second round of questioning.

The Chairman. Mr. Marlenee.

Mr. Marlenee. Thank you, Mr. Chairman. Mr. Wellington.

Mr. Wellington. Yes, sir.

Mr. Marlenee. You have a big job up there. I would like to
reduce this to the lowest possible level so that one of my col-
leagues, who I will leave unnamed, may understand one of the
questions he was pursuing with you.

You have a blue bicycle with a white seat and customized han-
dlebars and it is taken from your front step and on the way to the
police station you see that bicycle in somebody’s front yard and you
jump out of your pickup truck and you run over in the front yard
and you grab that bicycle and you put it back in the pickup truck
and you go down the street. Have you broken the law?

Mr. Wellington. No, sir.

Mr. Marlenee. I hope my colleague understands that.

Mr. Abercrombie. Will the gentleman yield?

Mr. Marlenee. No, I will not yield. There are not many blue bi-
cycles with customized handle bars.

Mr. Abercrombie. You must live in a different neighborhood.

Mr. Marlenee. Maybe make it a surfboard. Mr. Richey.

The Chairman. Let the gentleman from Montana use his time.

Mr. Marlenee. Thank you, Mr. Chairman. I have not yielded
any time yet.

Mr. Richey, if a law were violated on recording phone calls — per-
sonal phone cedis — who would be in Virginia charged with pros-
ecuting the offending party, if in fact, the law were violated?

Mr. Richey. Well, it would depend upon which law, whether it
was title III of the Federal statutes or the local Virginia statutes. It
could be the local U.S. attorney or the local prosecutor in the juris-
diction for the State there, either one.

Mr. Marlenee. Who would be in charge of prosecuting?

Mr. Richey. Who would be in charge of prosecuting? Either the
State attorney or the U.S. attorney in that district.

Mr. Marlenee. And who would file the charges?

Mr. Richey. The person who is the victim would probably call
that to the attention of the prosecuting authority and say my
rights have been violated and I need to have some assistance here
and make a determination.

Mr. Marlenee. Then the person who has been violated does have
the opportunity to be protected by filing charges.

Mr. Richey. Yes, sir, and in addition, in most jurisdictions — I
don’t know about Virginia — they also have rights to bring a civil
action if their rights have been violated.

Mr. Marlenee. Let me ask you this: To your knowledge is there
an ongoing investigation, and as a matter of fact, have any charges
even been filed of record?

Mr. Richey. I have not heard any charges have been filed. And I
would have thought my clients would know because it is the prac-
tice in most jurisdictions — I know it is in Florida and with most
U.S. attorneys’ offices — when this kind of matter arises to write a
letter to the parties involved saying what is your position, do you

149

have any explanation, what is going on, in order to avoid an unnec-
essary proceeding.

Mr. Marlenee. So, this committee is substituting itself in the
judgment of whether a law has been broken when there is recourse
through the courts and through official jurisdiction set up by the
States.

The Chairman. Would the gentleman yield?

Mr. Marlenee. Just a moment. I am going to pursue this other
line and it will pertain to the same thing, Mr. Chairman, and then
I will most respectfully yield.

Mr. Richey, some have attempted to allege a breaking of the law
when Black required documents from Hamel. Doesn’t public record
indicate Hamel was aware certain documents were removed from
his home between May 20 and November 1990, that he was aware
these were gone?

Mr. Richey. He is aware today? Yes, there have been newspapers
articles and that kind of thing, and Hamel is aware that he was
duped, or whatever.

Mr. Marlenee. Mr. Richey, if an illegal act was in fact engaged
in or commissioned who would be charged with prosecuting the of-
fending party?

Mr. Richey. Well, Mr. Hamel ought to take his complaint to
some appropriate prosecuting authority or — and/or file a lawsuit
and either the prosecuting authority will deal with it or there will
be a tort action, I assume. I don’t represent Mr. Hamel.

Mr. Marlenee. What you are telling me, bottom line, Mr. Coun-
sel?

Mr. Richey. Excuse me.

Mr. Marlenee. What you are telling me, bottom line, Mr. Coun-
sel, Mr. Richey, counsel, are that Mr. Hamel’s responsibility in this
case would be to file the charges if in fact laws have been broken if
he feels the law has been broken.

Mr. Richey. If he desires to do that. I understand he has years of
allegations of all kinds and has never brought any charges. I would
note also if he wants to file a lawsuit, he can file a lawsuit. If he
wants to go to a prosecutor, he can go to a prosecutor. I feel com-
fortable in defending my client in either circumstance.

Mr. Marlenee. Let me go one step further. Are there any
charges to your knowledge that have been filed or are on record
right now concerning the theft of illegal documents?

Mr. Richey. We have not been notified of any. I assume there
are not.

Mr. Marlenee. Of course there are not.

The Chairman. Will the gentleman yield?

Mr. Marlenee. Yes.

The Chairman. To save him from reducing this to the lowest
point, I think in fact an active investigation is underway. In fact, I
believe the investigators were at this hearing this morning. You
can ask those questions of Mr. Hamel.

Mr. Richey. Mr. Chairman, if there are investigators around, I
would hope they would enjoy the liberty of talking to me about it. I
would be happy to assist them in every way I can to help them.

Mr. Marlenee. Mr. Chairman, at this juncture let me introduce
into the record a November 4 letter from the commonwealth attor-

150

ney for Arlington County, Arlington, Virginia to the Honorable
Don Young, Ranking Minority Member. [See page 605.] November
4, 1991, Mr. Young, Reference your letter of November 4, 1991, Mr.
Charles Hamel has not been authorized to offer anyone immunity
in this jurisdiction nor to speak for this office in any way whatso-
ever.

“This office has no present plans to prosecute anyone in connec-
tion with the Alyeska/Wackenhut/Hamel affair and Mr. Hamel
has been so informed.”

A speculative question Mr. Richey.

Mr. Richey. Yes, sir.

Mr. Marlenee. If you had a client and that client came to you
and alleged that he had been engaged in an activity, a very illegal
activity, but that someone else had in fact come into engaging in
an activity that was in his eyes illegal against him, would you
think that that client would be well advised to go to law enforce-
ment authorities and request a full investigation of the alleged
wrongs that he had?

Mr. Richey. It would probably be a very foolish thing to do.

Mr. Marlenee. A very foolish thing to do. I yield back the bal-
ance of my time.

The Chairman. Do you want to answer?

Mr. Richey. I think he would probably wind up getting prosecut-
ed himself if he walked in and confessed to a bunch of stuff in
order to file some sort of claim. He is in a bind. He is in a difficult
position.

The Chairman. Mr. Richardson.

Mr. Richardson. Thank you. Mr. Hermiller, Mr. Hamel has
claimed the investigation you authorized violated his right to priva-
cy. While you might not agree with that claim, I do understand you
apologized to the citizens of Alaska for the investigative techniques
that were used with respect to them and you indicated they
wouldn’t be taken again.

I think I for one respect the view that you need corporate priva-
cy. What I want to ask you is, how did you know these documents
were in the hands of Mr. Hamel — and might I say, would you char-
acterize these documents that were in Mr. Hamel’s hands as those
that clearly violated the attorney-client privilege and contained in-
formation relating to what you might consider a trade secret or
something that is corporately very sensitive to the operations of
your company?

Mr. Hermiller. Congressman, as you have heard, Mr. Hamel
had a long period of time in which he had received company docu-
ments. I certainly was aware in early 1990 that Mr. Hamel also
had an association with the producer of the program that was
shown on the BBC, the Scottish Eye program.

The instructions I gave in this regard and that Mr. Wellington I
know passed on to Wackenhut were that this investigation was to
be focused on where those documents were getting out of Alyeska.
Where were those documents being stolen from Alyeska?

That was the single objective of this investigation. But given that
association, it was certainly Mr. Hamel was, a focus. We found out
very, very soon after that that indeed he did have that document

151

and he had many, many more of our attorney-client privileged doc-
uments because as I said before he bragged about this.

The Chairman. Would the gentleman yield?

Mr. Richardson. Yes.

The Chairman. I am sorry, I may have missed what you said.
Did you say he gave that document to the producers?

Mr. Hermiller. No, I didn’t. I said I was aware that there was a
friendship or association between the producer of that BBC pro-
gram and Mr. Hamel.

The Chairman. All right. But you don’t know whether in fact he
gave him that document?

Mr. Hermiller. No, I don’t.

Mr. Richardson. Would you characterize these documents as cor-
porate sensitive, apart from anything that might be related to the
investigation of this committee, trade secret? Your future plans
with Japan — what is the range of documents that in your judgment
were compromised or stolen?

Mr. Hermiller. The ones that I referred to, as I said, were sensi-
tive documents that I have been advised by both my general coun-
sel and outside attorneys that were very, very sensitive to ongoing
litigation regarding the Exxon Valdez spill that Alyeska was en-
gaged in.

Mr. Richardson. As I understand it the sequence of events went
like this: You concluded you did not want your legal department to
conduct the investigation because they were possibly sources of
leaks.

Mr. Hermiller. That is correct.

Mr. Richardson. The second phase was: Did you or did you not
conclude your general counsel also was possibly involved in the
leaks and was he or was he not engaged?

Mr. Hermiller. He was not engaged until later on in the investi-
gation.

Mr. Richardson. Your decision to hire Wackenhut was after the
Scottish Eye disclosure and it was prompted by pressure from the
shareholders of your company?

Mr. Hermiller. Now, as I said before, in a meeting in January
1990 at which the Scottish Eye program was shown, this was the
first time that the owners of Alyeska had any idea that these attor-
ney-client privileged documents were outside.

And there was, as I mentioned before, concern expressed by all
the owners and certainly there was great concern within Alyeska
itself about these documents being in the public.

Mr. Richardson. Did you ever consider hiring outside counsel?

Mr. Hermiller. As this investigation started, we relied on coun-
sel within Wackenhut and the instructions that Mr. Wellington
gave to Wackenhut that this was to have a single objective to iden-
tify sources within Alyeska, that it was to use standard investiga-
tive techniques and that it was to be focused.

And those instructions were, as I have been advised, followed by
Wackenhut during this period.

Mr. Richardson. Now, at any time, did you ever talk with Wack-
enhut’s legal counsel?

Mr. Hermiller. I did not.

Mr. Richardson. Any reason why not?

152

Mr. Hermiller. I did not talk to anyone from Wackenhut at any
point in this investigation.

Mr. Richardson. Now, Mr. Hermiller, I — your — David Marquez
is your general counsel?

Mr. Hermiller. David Marquez, that is correct.

Mr. Richardson. He is currently your general counsel. And Fred
Smith is where?

Mr. Hermiller. Fred Smith is still with us. He will leave us the
end of the year. David came on July 1.

Mr. Richardson. Before I go to Mr. Richey, let me give you a
statement Mr. Marquez left yesterday at 12:30 p.m. November 4.
[See page 606.] This was obviously before this morning. Were you
here this morning?

Mr. Hermiller. I was here.

Mr. Richardson. You were here. Part of his statement I will not
read but the conclusion is after the hearings are completed, all the
witnesses have testified, and all the evidence is in, it will be clear
that no Congressman nor any member of the staff was ever investi-
gated.

In fact, the single purpose of this investigation was to trace
stolen confidential attorney-client privileged documents back to
their source within Alyeska. Alyeska gave clear instructions to
Wackenhut that the investigation was to be conducted legally. We
were assured it was and we believe it was.

My question is after this morning’s testimony, do you still sup-
port that statement by your counsel?

Mr. Hermiller. I do, I think, Congressman. Let me tell you,
though, where I come out on this whole question. And that is, pri-
vate investigations conducted by companies which involve third
parties, particularly if those third parties are critics, just doesn’t
work.

I don’t ever want to get involved in one of these things again,
because I think one of the things you saw this morning is you lose
control of some of these things. That is of great concern. I am not a
security person. It is the first time I have been involved in one of
these.

But believe me the risk benefits of this thing are just not worth
it. I think the concept is fine. I, as a president of a concern like
Alyeska, have a duty to protect company assets and in that sense
the concept of trying to find out where these things are is fine. It is
when you get it into practice that you run into problems. Of
course, that is what has happened here. As I said before I would
call in the FBI or I would get the State agencies in on this thing.

Mr. Richardson. Mr. Hermiller, you seem very sincere. I have
people that respect you and I must say I think your statement is a
sincere one. Mr. Richey, you were here this morning also?

Mr. Richey. Yes, sir, I was.

Mr. Richardson. Did you hear the questions I asked Mr. Wack-
enhut relating to your famous legal opinion of May 22, 1990?

Mr. Richey. Yes, sir, I did. I can’t remember in specifics what
they were, but I was here, I did hear the questions. I regret it very
much that I could not precede Mr. Wackenhut. I think it would
have been of great assistance to the committee and shortened this
process if I could have testified first.

153

Mr. Richardson. I am going to give you a chance now to respond
basically. I am going to center my questions on your advice which I
characterized as perhaps — and it relates to the investigation of
Congressman Miller whether covert or overt, and basically the way
I characterized it, reading your, I think very thorough, memoran-
dum was that you indicated that there were risks, it was going to
be difficult.

It probably was not advisable, but it was possible, and that both
Wackenhut and Alyeska were fully in their rights to conduct an
investigation which may use covert operatives who may assume dif-
ferent identities when dealing with a Congressman. I want to give
you full opportunity to respond to what — when you were writing
Mr. Wellington, in care of Mr. Wayne Black, what exactly were
you saying about the investigation of Congressmen Miller?

Mr. Richey. The matter had arisen as I noted earlier basically 24
hours prior to the time Mr. Black came to see me. I must say, Con-
gressman Richardson, that I cannot imagine any company or corpo-
ration, individual, reading this letter, even though it doesn’t say
thou shalt not investigate a Congressman, I cannot imagine a ra-
tional corporate person reading this letter and continuing with an
investigation of a Congressman.

It is a parade of horribles. And I think it is quite clear from this
letter that in context, taken as a whole, we say don’t do it and we
also say if you decide for some reason that you are going to do it on
page two I specifically note that.

It begins on the preceding page, the very bottom line. [See page
453.] “We believe that neither Alyeska nor its agents should ap-
proach the Congressman as part of an undercover investigation
until these issues [which we are raising in this memo] are ade-
quately researched and analyzed and until you make an informed
policy judgment that the potential benefits are worth the risks and
associated costs’’; and it is perfectly clear from our memo, which
was done on an emergency basis, as fast as we could, that we did
not believe that this subject was adequately researched.

The result of this is that the day after this memo came out, Mr.
Wellington had a meeting with Mr. Black, and no further research
was necessary because Mr. Wellington, as I understand it, very
clearly got the drift of what I was saying in this memo, which was,
don’t do it. Mr. Black understood, don’t do it. He said, Thank you
for pointing this issue out to me, I had no idea that there was any
issue in investigating a Congressman. He is a former public corrup-
tion investigator for the State. He was shocked at the concept, and
I said, this is simply too powerful a position to get anywhere near.

Mr. Richardson. So why do the memorandum in the first place?
All right, Miller’s name kept coming up, but did Mr. Black start
talking about telephone recordings?

I want to note your memo here on page 5. Here I am quoting
you, “Before recording conversations, however, you must determine
whether this type of electronic surveillance is legal.’’ At the bottom
of the page, “It is our understanding that conversations with the
Congressman might take place in Washington, DC., Virginia, and
Maryland. Recording conversations with one party’s consent is
legal in the District of Columbia and Virginia. It is illegal in Mary-
land.”

154

Did Mr. Black say to you, I want to go after this guy and the
only way I can nail him is by telephone recordings? Why is this in
your memo?

Mr. Richey. It is in the memo because whether they were going
to investigate a Congressman or not, one of the questions Mr.
Black posed to us, and he wanted it as part of a written memo as
opposed to the immediate answer I gave to him that afternoon, was
what was involved in tape recording in the various jurisdictions.

He had already considered tape recording because he had al-
ready determined, I suspect through Mr. Wellington, that it was
legal to tape in Alaska. He told me that the first time he came, and
he told me they planned to tape. The point I made to him was, in
addition to not investigating a Congressman, should for some
reason anybody be foolish enough to do it in the face of this memo,
you better have everything on tape because you are going to get
slaughtered with it, and even worse without it.

Mr. Richardson. Now, Mr. Wellington, does what Mr. Richey
said correspond to your conclusion? The memo I have in front of
me now is the memorandum of Mr. Black to you, May 23, 1990.

Was it your conclusion after receiving this memo that you should
get a legal opinion, or did you tell Mr. Black to stop it right there,
especially after phrases — let me refer to page 5 of the memoran-
dum — “Surely, future contact with Hamel will result in additional,
more clarifying information about Congressman Miller.”

Mr. Wellington. Mr. Congressman, the concern that I had, as
we proceeded through the investigation, was that Mr. Hamel was
continuing, continuing to use Mr. Miller’s name. And he also was
continuing to talk about his association with staff members of this
committee here. And I was concerned. I didn’t feel I had the profes-
sional expertise to make a decision as to where we were going here.

Mr. Hamel asserted that he had paid for staff member’s vacation
to Alaska, he had asserted that the individual had come to his
house and got drunk and he had to pour him in a car. He asserted
that Mr. Miller stayed at his house in Valdez.

I said, wait a minute, time out, this appears to be an area we
need to look at, because our main focus has always been who stole
our documents, how do we go about getting them back.

That was our main focus. And I just did not feel comfortable, sir,
with what appeared to be a relationship between Mr. Hamel and
Congressman Miller and members of the staff. And at any time, at
any time it looked as if there were going to be any indication at all
that Mr. Miller was going to be involved in this, we were going to
shut her down, and the words that I told Mr. Black were the barn-
yard words that my friend wouldn’t want me to repeat here, when
I flew to San Francisco, but I made it very goddamn plain that we
were not going to investigate, have anything to do with investigat-
ing a Member of Congress or staff, and we would shut the damn
thing down, and I said it in a little stronger terms than that, and I
went home.

Mr. Richardson. And the memorandum of Mr. Richey was in re-
sponse to your request?

Mr. Wellington. Mr. Black and I, sir, discussed this very sensi-
tive issue, and I says, I think we need to get legal help. I says, I am
into a situation now that I don’t feel comfortable with. We still had

155

not made a decision at that time, sir, to bring in our in-house coun-
sel.

So Mr. Black advised me that he had a law firm who had Mem-
bers, who had a long history in evaluating corruption cases and
things like this, and I says, get them on board and talk to them,
because if there is any indication that Mr. Hamel is acting as an
agent, I need to know where this is going to take us.

Mr. Richardson. Thank you, Mr. Chairman.

The Chairman. Ms. Vucanovich.

Mrs. Vucanovich. Thank you, Mr. Chairman.

Mr. Hermiller, I would like to talk a little bit about your right to
privacy. Mr. Hamel has claimed the investigation you authorized
violated his right to privacy. And while you may not agree with
that claim, I do understand that you have apologized to the citizens
of Alaska for the investigative techniques that were used with re-
spect to him, and you also said you wouldn’t take similar action.

My question is, I want to ask you about Alyeska’s right to priva-
cy, and you, as Alyeska’s CEO, also have a right to corporate priva-
cy. Am I correct that very sensitive corporate documents that con-
tain privileged communication between your attorneys and
Alyeska were in the possession of individuals who lacked legitimate
right to these documents?

Mr. Hermiller. That’s correct. That is what I was advised.

Mrs. Vucanovich. And how did you become aware or how did
you know that these documents were in the hands of Mr. Hamel?

Mr. Hermiller. I don’t think we did know that at first. Certainly
Mr. Hamel, as I said before, Mr. Hamel’s association with the pro-
ducer of the BBC program, led us to consider Mr. Hamel as being a
focus for looking further. And as I said, indeed, within a very short
time, within a month, Mr. Hamel revealed that indeed he did have
documents.

Mr. Black then found out relatively quickly that he had over 600
pages of Alyeska documents, many of which were attorney-client
privileged documents.

Mrs. Vucanovich. Mr. Hamel has repeatedly accused you of vio-
lating his privacy. To your knowledge, has he ever acknowledged
that he may have violated your corporate right to privacy by ac-
quiring your documents?

Mr. Hermiller. Not that I am aware of.

Mrs. Vucanovich. Has he ever offered to return these docu-
ments to you?

Mr. Hermiller. No, he has not, not to my knowledge.

Mrs. Vucanovich. Has he made an offer not to acquire your cor-
porate documents in the future?

Mr. Hermiller. No, on the contrary, I think he actively solicits
them.

Mrs. Vucanovich. I am curious to know how you can survive if a
private citizen continues to acquire your documents and corporate
legal advice. It seems to me that you have now taken the proper
action, and assured proper contemporary corporate ethical stand-
ards.

Do you have any indication that Mr. Hamel similarly will refrain
from acquiring any Alyeska documents or other property?

156

Mr. Hermiller. I have not gotten any commitment that that is
the case.

Mrs. Vucanovich. Well, Mr. Hermiller, when you and Mr. Wel-
lington discussed launching an investigation into the leaks of
Alyeska documents, did you discuss the question whether your
legal department should be informed?

Mr. Hermiller. We did.

Mrs. Vucanovich. Can you tell us a little bit about what hap-
pened at that discussion?

Mr. Hermiller. I think that we were concerned that the legal
documents that I referred to, the privileged, confidential, sensitive
documents, could be certainly getting out of our own legal depart-
ment, our in-house legal department.

Certainly other possibilities were the contract legal firms that we
had working on the litigation that I referred to before, and certain-
ly during this period of time, it was a period of intense activity, lit-
erally thousands of pages of material were being copied, and we
had to certainly contract clerical help.

Our first, I think both Mr. Wellington and my first thoughts
were that perhaps these were the areas that the documents could
be getting out of Alyeska.

Mrs. Vucanovich. Wasn’t it likely that the leak of the attorney-
client privileged document that appeared on the Scottish Eye pro-
gram would have had to have started with someone connected with
the legal department?

Mr. Hermiller. That’s correct.

Mrs. Vucanovich. And I think as the investigation progressed, I
understand your legal department did become involved.

What made you change your mind and decide to involve your
general counsel?

Mr. Hermiller. I was advised by Mr. Wellington that certain
procedures that he had followed with regard to our own in-house
legal department had pretty much exempted them from further
consideration.

Mrs. Vucanovich. Once your general counsel was involved, did
he remain involved throughout the remainder of the course of the
investigation?

Mr. Hermiller. He did.

Mrs. Vucanovich. Why didn’t you engage outside legal counsel
at the beginning of the investigation?

Mr. Hermiller. I wish I had.

Mrs. Vucanovich. Did you ever talk with Wackenhut’s legal
counsel?

Mr. Hermiller. I did not.

Mrs. Vucanovich. Any reason?

Mr. Hermiller. I did not talk to anyone from Wackenhut that
was connected in any way with this investigation.

Mrs. Vucanovich. Thank you.

I would like to ask Mr. Richey a couple of questions. Mr. Richey,
I am pursuing the Wackenhut investigation. Why did Wackenhut
consult you to begin with?

Mr. Richey. I believe Mr. Black came to me because of the
nature of my knowledge and experience of this particular type of
problem.

157

Our law firm does a lot of this work for many kinds of clients.
We had a major case last year, for instance, with the bank in
Miami that was ripped off in a $3 million fraud where their proper-
ty was taken. That man is now in the Federal penitentiary. We
handed that case to the FBI.

Mr. Black is aware of that. He and I have done this type of thing
with people involved in ripping off corporations and individuals
before. Because of my unique experience, we sort of specialize in
this area. I think that is why he came to me.

Mrs. Vucanovich. I would just like to establish, did you ever dis-
cuss the legal consequences of taping conversations of Mr. Hamel
with Wayne Black?

Mr. Richey. Oh, yes. And in fact, he asked me that at the first
meeting. I immediately walked into the library and did a quick
check. I picked up Carr on electronic surveillance on the shelf and
brought it in, and told him that, on an off-the-cuff position, this is
what I thought, but that we needed to look at this further, and we
addressed the issue in the legal memorandum.

He had already planned on tape recording Mr. Hamel if he
could, and as I stated earlier, he had discussed that, I believe, with
Mr. Wellington, and knew that he could do it in Alaska even
before he came to us.

I advised him that if he was taping Mr. Hamel that every place
it was legal to do so, he needed to tape every conversation he could,
because you get into a problem, it has been my experience in pros-
ecuting cases, it has been my pleasure to take advantage of some
United States attorneys who had this problem, if some conversa-
tions are taped and some aren’t, it turns into a problem for the
party who has the taped conversations. So I told him as long as it
was legal, he needed to try and tape it all with regard to to Mr.
Hamel.

Obviously the position was that no Member of Congress and no
staff member would be taped. Mr. Black and Mr. Wellington and I
had had a discussion, separately but it was all the same, as I un-
derstand, that if any Member of Congress or their staff showed up
in this investigation, Mr. Black was to immediately identify him-
self as Wayne Black from The Wackenhut Company to make sure
that they were not misled as to who he was.

Mrs. Vucanovich. How did Mr. Miller’s name come into this in-
vestigation?

Mr. Richey. Mr. Hamel brought it up, and he brought it up re-
peatedly.

Mrs. Vucanovich. And what was your advice with regard to Mr.
Miller?

Mr. Richey. Stay as far away as you possibly can. That it’s ex-
tremely dangerous; it’s a powerful, powerful position. If the person
is committing every crime in the book, still stay as far away as you
possibly can.

Mrs. Vucanovich. To your knowledge, was this advice adhered
to?

Mr. Richey. To the best of my knowledge, it was adhered to all
the way through.

Mrs. Vucanovich. Were you aware of Mr. Hamel’s pollution al-
legations?

158

Mr. Richey. I learned about them through some of the conversa-
tions that he had with Mr. Black, and he in fact wanted Mr. Black
to conduct some sort of surveillance of dumping, and Mr. Black
asked our opinion. And we wrote a memorandum with regard to
what his obligations would be if that occurred, but we told him,
stay away from that, try not to get involved in that, try not to do
something that he might be able to get somebody else to do rather
than you, because then if it’s true you are not obstructing their
being able to report what actually happened, and you don’t want to
do that. You want to keep out of the way of obstructing somebody
from reporting a violation if it occurs.

Mrs. Vucanovich. Were you convinced at any time that Mr.
Hamel actually had received stolen documents?

Mr. Richey. Oh, yes. Mr. Hamel admits on the tapes that he has
received stolen documents. Mr. Hamel has admitted repeatedly
this.

He is also admitted his reason for going after the oil companies.
He wants money. The man is an extortionist.

Mrs. Vucanovich. I have no further questions, Mr. Chairman.
Thank you.

The Chairman. Mr. Richey, if you could provide for us where
that is said on the tape, I think that would be helpful to the com-
mittee because we have not yet been able to locate that.

Mr. Richey. I will go through and give you the sections where
the general conversations occurred which confirm to me Wayne
Black’s original statements in his interviews prior to the time they
started taping.

So you have a combination of factors. You have the interviews
with Black, you have the confirmation on the tapes, and you have
the letter of the meeting concerning Mr. Hamel’s counsel with
counsel for Alyeska, which I referred to earlier, which is the Heller
Ehrman letter indicating that in a conversation with Julian
Mason, that Mr. Hamel would quit reading their mail and quit
doing these bad things to him if they can get themselves paid off.

The Chairman. I understand that, but could you provide us for
the record with where on the tape Mr. Hamel received stolen docu-
ments?

Mr. Richey. What I’ll do, I will provide you with a combination
of the memos Mr. Black reported to me and those sections of the
tape which I believe confirm it.

The Chairman. So we are back to what you believe.

Mr. Richey. No, sir. I saw it, it is good evidence, I would love to
present it to a jury.

The Chairman. Well, I just want you to provide it for the record.

Mr. Taylor. Mr. Chairman, would it be possible for us to enter
all the tapes into the record and go from there?

The Chairman. We will make that decision down the road. We
have discussed that with the Minority. All Members have access to
it at this time.

Mr. Richey. Mr. Chairman, I have advised my client that they
should fully disclose absolutely everything here. I think the com-
mittee would be performing a public service by disclosing those
tapes.

The Chairman. Once again we have your beliefs and opinions.

159

Mr. Richey. Just trying to help.

The Chairman. The gentleman from Florida. Excuse me, Mr.
Abercrombie.

Mr. Abercrombie. Thank you.

Mr. Hermiller, I think I am at least — I am not quoting you di-
rectly. I am quoting you in context. Generally, when you said you
didn’t want to ever get involved with something like this again be-
cause it gets away from you. I will grant you, for purposes of our
conversation, your good faith with respect to that, that you were
concerned as to what had happened inside your company and
relied on Mr. Wellington as your security person to look into it.
And I will also grant on terms of good faith, Mr. Wellington, that
you did the best you could, and that when people in good faith
carry out something like this, often, if it starts to get away, you
think it gets away, then you have to bring in the attorneys, and I
think we can all sympathize with each other when that happens.

Now, with respect to that, I want to get very clear in my mind
about something I think is getting away from all of us here. No dis-
respect to you, Mr. Richey, but your view of what is allowed legally
or not and what is good policy and not good policy from a company
point of you may be two different things.

I think if I understand the conversation that has taken place
with Mr. Wellington and Mr. Hermiller today, whether something
is legal or not is not necessarily something that is good policy,
right? Is that a fair characterization?

Mr. Hermiller. Yes.

Mr. Abercrombie. The reason I am asking is about these phone
records.

Now, Mr. Richey stated at one point, that they never really
cared, AT&T, and so on, about keeping records. I think this privacy
issue is very, very important. You think it is very, very important,
obviously, with respect to your company, right?

Mr. Hermiller. That’s correct.

Mr. Abercrombie. Now, I have in front of me, and I am not
trying to throw a fast one to you here, the only reason I am bring-
ing it up is because of the question of the phone records coming
out. This is a copy of the Anchorage Times, Friday, September 27,
and if you will grant me, I don’t know if you have a copy or have
seen it, but if you grant me that I am not trying to trick you or
lead you down a primrose path, I just want to quote a portion and
get your response. [See page 607.]

“Alyeska spokeswoman Marnie Isaacs said Thursday,” this is
part of an article from Tert Tarrant, the Times business writer, on
page — I am sorry, I don’t have the page, but it’s Friday, September
27th. the Anchorage Times. “Alyeska’s response to the Trustees” —
this is something called the Trustees for Alaska, are you familiar
with that organization?

Mr. Hermiller. I am.

Mr. Wellington. Yes, sir.

Mr. Abercrombie. “ ‘Right now it is our No. 1 priority,’ Isaacs
said. We will be replying, and it will answer all of the Trustee’s
questions and will include monitoring of phone records.’ ”

160

This is the third — I believe it is the third column, if what Mr.
Jordan put in front of you is what I am referring to. Are you famil-
iar with this statement in any way, in general?

Mr. Hermiller. I am really not, Congressman. I kind of stopped
reading the papers, to tell you the truth.

Mr. Abercrombie. I understand. But let me ask Mr. Wellington
that.

Mr. Wellington, at any time during the investigation, and I have
gone through your testimony, during this investigation, were phone
records a part of the reports that were being made to you?

Mr. Wellington. Yes.

Mr. Abercrombie. OK.

Did you question at that time how the phone records were ob-
tained? Was this part of your anxiety as to how — let me ask you
why — let me tell you why I am asking that question, again, so it is
very clear.

I take on faith that you were very concerned that all this be
done on the up-and-up, and that deep water could be gotten into
fairly quickly. Were you concerned about how the phone records
were obtained?

Mr. Wellington. During the course of the review of the conduct
of the investigation, and I think I need to kind of lead you through
it because — once Mr. Richey’s firm was brought in, they gave us
the opinion memo on May 22, I believe it was, and I flew down to
San Francisco and met with Mr. Black, and we put a caveat on
where we were still going with the thing, we then decided at that
meeting, sir, to continue to use the law firm of Mr. Richey and his
partner, to advise the Wackenhut investigators, particularly Mr.
Black and Mr. Lund, as they saw fit.

I am in Alaska, they are in Florida, dealing with a lot of activity
in the lower 48, and Mr. Hamel is sitting here in Virginia. So basi-
cally I told Mr. Black and I told Mr. Richey that, as we progress
through this, if you need legal advice, just go get it. You don’t have
to call me and hunt me up, just go get it. I think Mr. Richey will
probably testify that was done regularly.

As far as the telephone calls were concerned, during the general
meetings that we had where Mr. Richey and his law firm were
present, by then our in-house counsel, Mr. Lon Trotter, was
present. Our California attorney was present. And this other attor-
ney in Alaska was up there.

I would go around the room and say, does anybody see anything
wrong with what we are doing? And sometimes if you don’t pin an
attorney down, you don’t get a very good answer, so I would point
to them. Any problems with what we are doing? I says, if any one
of you people feels squeamish about what we are doing, we ain’t
going to do it.

And we talked about the telephone records in that vein. Does
anybody have any problems with the videotaping, with this, with
that? And they all sat there and said, fine, you are in good shape.
So did I get legal advice? I had attorneys hanging out of all my
pockets before this was over with.

Mr. Abercrombie. Very good. This is getting some real clarity
here for ordinary people.

Mr. Wellington. That is why I needed them, too.

161

Mr. Abercrombie. I understand.

When you said, is this all right, did you have any knowledge as
to whether there was any phone conversations beyond that which
has been discussed generally at this hearing, for example, in
Alaska?

Mr. Wellington. Any

Mr. Abercrombie. Telephone records of, say, the Trustees for
Alaska or anybody else in Alaska.

Mr. Wellington. We had provided some internal ROM switch
records off of our own system that were analyzed.

Mr. Abercrombie. Not those. I am talking about something that
would be obtained in whatever fashion in Alaska or any phone
records of anybody other than Mr. Hamel, or somebody connected
directly to Mr. Hamel.

Mr. Wellington. I believe that when we reviewed the reports,
that there were other ones in there, sir, but I couldn’t say specifi-
cally which ones they were.

Mr. Abercrombie. OK. Are you familiar with what Ms. Isaacs
might have talking about when she said, including the monitoring
of phone records?

Mr. Wellington. I am not exactly sure what she is talking
about, but it is my understanding that in all probability, there was
no monitoring of — I guess it wouldn’t be AT&T up there, Anchor-
age Telephone Utility records for Trustees for Alaska.

Mr. Abercrombie. So the answer might be that there was no
monitoring of phone records, the answer could be, no, there was
not?

Mr. Wellington. That’s correct.

Mr. Abercrombie. I am not saying that is the answer, but that
might have been what the company is going to be coming forth
with.

Mr. Wellington. Sure.

Mr. Abercrombie. OK, the reason I want to go into that is, this
has to do with policy, Mr. Hermiller, I don’t know Mr. Hamel from
a white seat on a blue bicycle. OK.

The problem here is, for me, that for Mr. Hamel, apparently, you
are the villain, or collectively there is a villain here in the oil com-
pany. This is what I have gotten from it and from your point of
view, Mr. Hamel is the villain.

What I am concerned about here is whether or not we have
gotten so far afield in this Nation from the — I think Mr. Wacken-
hut said this morning there are as many laws on surveillance as
there are stars in the sky. But there is a North Star and it is Axed.
And where I come from you navigate by the fixed star. The fixed
star for me is the Constitution of the United States. And whatever
bad judgment or good judgment I might make or whatever opinions
I have that are worthy and unworthy and so on, that Constitution
is the fixed star. And I am sure Mr. Richey would agree with that,
regardless of what difference of opinion we might have.

So what I fear is that in the name of succeeding with what we
want to accomplish in terms of policy, we forget about the funda-
mentals, and the fundamental here is the rule of law under the
Constitution that we all serve. That is why I am worried about this
net being cast out there and whether we develop a casual attitude

162

with respect to whether a document is stolen or not stolen. If it
was stolen, it is okay for me to steal it back, for me to appropriate
to myself, including myself as a Member of Congress, some kind of
prosecutorial or judicial garment that I assume, and as a result,
that we find ourselves at this hearing today.

So the reason I ask about Trustees for Alaska or anybody else is,
I want to find out whether this investigation went beyond Mr.
Hamel into — or whether there was a policy in regard to the investi-
gation other than Mr. Hamel that said, go anywhere that you
think there is something going on, and carry it out. Was that or
was that not

Mr. Hermiller. I agree with what you said, Congressman, and as
I said before, I am absolutely against and will never again be in-
volved in a private investigation that we got involved here, because
of that loss of control.

I regret very much, for example, the Dan Lawn situation. How
that tied into our legal documents, I have absolutely no idea. But it
was done and I found out about it.

The Trustees for Alaska, I think, fall in the same category. It
was done, but certainly I am not sure what it really added to the
investigation.

Mr. Abercrombie. I think if nothing else it is good you came
here today because I had a different idea before your testimony of
what Alyeska’s orientation was, let me say, than what has been
presented here.

I just want to, I guess, conclude then by saying that I do find it
disconcerting at best, and outrageous at worst — just trying to think
for myself, I will be frank with you — how I would feel if someone
came into my house under false pretenses and took mail or docu-
ments, however they want to characterize it, from my house. I
might have to reconsider how I feel about the National Rifle Asso-
ciation or something.

I hope that if nothing else comes out of these hearings, that
people will understand that we can’t live this way together in this
country. If we are going to dispute with one another, let’s dispute
in the open.

I also have concluded on this that we do need to determine
whether or not those kinds of things were in fact legal, and if they
were not, then they need to be prosecuted, they need to be pursued,
and not be merely inveighed against by us or anybody else.

Thank you, Mr. Chairman.

Mr. Lagomarsino. Mr. Chairman.

The Chairman. Mr. Lagomarsino.

Mr. Lagomarsino. Mr. Chairman, I just have one question. I
don’t think this question has been asked.

Mr. Richey, there have been claims that the Wackenhut investi-
gators illegally obtained personal credit information. Can you com-
ment on that?

Mr. Richey. Yes, sir. What happened, as I understand it, from
the paperwork in the file, is that they made what is known as a
DTEC request to the company involved. A DTEC request gives you
name, address, phone number, that kind of general public informa-
tion, and it does not give you credit information. The credit compa-
ny document itself shows at the top that it is a DTEC request, but

163

the credit company sent more than they had been requested to
send, and that there is no violation by

Mr. Lagomarsino. You say “they,” you are referring to Wacken-
hut?

Mr. Richey. Yes, sir, to Wackenhut. And I looked at those docu-
ments just the other day, because the issue had been raised, I had
not previously looked at them, and there is no violation of law.

Mr. Lagomarsino. Thank you.

The Chairman. Mr. Johnston.

Mr. Johnston. Mr. Hermiller, let me review some of the testimo-
ny that you had with Mrs. Vucanovich. You said that these docu-
ments that Mr. Hamel received, most of which came from in-house
attorneys, contract attorneys, clerical workers?

Mr. Hermiller. I don’t know where they came from, Congress-
man. I said that those were the three likely, certainly as we looked
at this thing initially, those were the three likely sources.

Mr. Johnston. Do you have any evidence at all that any of these
documents came from any source other than employees or contract
employees of your organization?

Mr. Hermiller. I don’t have any evidence.

Mr. Johnston. Now, Mr. Richey, you just heard his testimony. I
should say the prominent Mr. Richey.

Mr. Richey. You are too kind, Mr. Johnston. It is the prominent
Mr. Johnston. You’re the only Member of this committee I have
seen before and heard of so it’s nice to see a Floridian.

Mr. Johnston. I am not sure that is good or bad, but Mr. Wack-
enhut referred to you this morning as “the prominent” every time
he referred to you.

Mr. Richey. Well, he is very kind.

Mr. Johnston. You just heard his testimony, and earlier you
said Mr. Hamel admitted receiving stolen documents.

Mr. Richey. Yes, sir.

Mr. Johnston. Every one of the documents came from your cli-
ent’s employees.

Mr. Richey. Employees can steal, and the purpose of this investi-
gation was to figure out which employee was stealing.

Mr. Johnston. But at the time they arrived at the post office box
of Mr. Hamel and he opens them, is he then guilty of a crime?

Mr. Richey. Yes, sir, he is, if he knows they are stolen, and he
indicated he knew they were stolen. Possession of stolen property,
knowing it to be stolen, is a crime.

Mr. Johnston. And his admission was to Mr. Black?

Mr. Richey. Yes, sir.

Mr. Johnston. And you are sure Mr. Hamel, could it have been
braggadocio, he was receiving stuff from Alyeska’s employees, and
saying, Gee, they were stolen?

Mr. Richey. There is a doctrine in the law with regard to admis-
sions, indicating that people do not normally admit to criminal ac-
tivity unless they are in fact involved in crimes. He may have been
doing anything. I don’t know, I don’t know Mr. Hamel. I had never
seen him until yesterday and we said hello and shook hands.

Mr. Abercrombie. That was before you called him an extortion-
ist.

164

Mr. Richey. He is an extortionist, in my opinion. I think that is
clear from the record. But I am not mean, I don’t have anything
personal against Mr. Hamel.

Mr. Johnston. Don’t sugarcoat it in the future.

Mr. Richey. Mr. Johnston, that is one reason that Mr. Black
came to me. I never sugarcoat.

Mr. Johnston. Mr. Wellington.

Mr. Wellington. Yes, sir.

Mr. Johnston. There were certain documents Mr. Black and his
employees or Mr. Lund and his employees found in the garbage or
trash of Mr. Hamel. One of them dealt with privileged communica-
tions between him and Trustees for Alaska. Were they passed on to
you at all?

Mr. Wellington. I don’t believe there was any confidential or
privileged communications in the trash. I am not aware of any.

Mr. Johnston. Were there any communications at all between
the Trustees for Alaska, their attorney, and Mr. Hamel that are in
your possession?

Mr. Wellington. No, I have nothing in my possession.

Mr. Johnston. Do you know what a pen register is?

Mr. Wellington. Yes.

Mr. Johnston. Would you tell the committee your definition of a
pen register?

Mr. Wellington. It is my understanding, and I am not an elec-
tronic expert by any means — and I don’t own one either, and nei-
ther does our company, to make that clear for the record, so if you
gave me one I wouldn’t know how to operate it — but it is my un-
derstanding you can hook it up to the telephone lines and as
phones are either digitally dialed or electronically dialed, it spits
out the number or records a number that is going out, and I be-
lieve it also would capture the length of time that the call is
being — the line is being trapped.

Mr. Johnston. I read part of Mr. Ramirez’s affidavit this morn-
ing, about pen registers being in the possession of Mr. Lund. [See
page 438.]

Mr. Wellington. I never saw any. I don’t have any.

Mr. Johnston. Do you know Mr. Lund?

Mr. Wellington. Yes, I do.

Mr. Johnston. Let me refer you to the memorandum from Mr.
Black to you of May 23, 1990. I think it is Exhibit 18. [See page
444.] If I could read part of it, “Ongoing telephone toll analysis re-
veals sustained activity between Hamel and others involved.”
Second page, “Investigation in progress . . . Ongoing telephone toll
analysis.”

To me, that would indicate immediate transfer to Black of knowl-
edge of current telephone calls made to and from Hamel. Would
that not — would you not render the same observation?

Mr. Wellington. No.

Mr. Johnston. What does that mean, then?

Mr. Wellington. To me, in my experience, that means that as
the investigation continues, that they are continuing to conduct
toll analysis as they receive them between Hamel and others. In
other words, as they get them from AT&T or whatever their source

165

was, that they were continuing to do that. That is what I take it to
mean, and that’s what I took it to mean.

Mr. Johnston. Could it also be considered as immediate analysis
of immediate telephone calls received by Black through a pen reg-
ister?

Mr. Wellington. I think a person who wasn’t familiar with the
case and didn’t understand what the guidelines were and was sit-
ting around might take this out of context and say it could mean
almost anything. So your interpretation, I think, would be reasona-
ble, for an uninformed person.

Mr. Johnston. But you

Mr. Richey. Mr. Johnston, could I address that? I have very sub-
stantial experience as a prosecutor with pen registers and traps,
and ran many of them for a number of years.

There was no local call information ever developed in this inves-
tigation. The pen registers do local calls as well as long distance
calls.

And I would also note, there were questions asked this morning
about whether there was an indication of illegal wiretapping of
various types. The result of that kind of illegal wiretapping of vari-
ous types is that this investigation would have moved very quickly,
you would have known immediately who the sources were, and
would not have had to do all of this hard work they did.

In addition, when you have illegal surveillance, it has been my
experience as a prosecutor who prosecuted police officers for
wrongdoing and subsequently defended cases involving this type of
activity, that there are mysterious confidential sources having very
interesting, detailed information and there is no explanation for it.
You know immediately that the reason for it is because there is an
illegal wiretap.

There is absolutely no evidence whatsoever looking at the body
of evidence in this case that there is any sort of unexplained evi-
dence of that type indicating either telephone taps or pen register
information. I haven’t seen anything there, and I think my nose
would have smelled it if it had been there. And I certainly would
have been extremely upset if I thought for a minute that was going
on.

Mr. Wellington. Mr. Johnston, let me also say, that you go back
and take a look after one of these things unveil like this did, and
see whether there was anything that would trigger an individual
as far as somebody telling you something and it not being so.

I went back and reviewed the Wackenhut reports as long as I
had them and I didn’t see anything there in my professional expe-
rience that would lead me to believe that anybody was playing
games with me.

There were no confidential sources, unknown sources, midnight
phone calls, which is sometimes used to cover an illegal activity.
There was none of that in these reports. And you have all this in
front of you.

So from my 35 years of experience, after I went back and re-
viewed it, I still did not see anything that gave me a queasy feel-
ing.

166

And, in fact, I called Mr. Black and I says, have you, have you
committed any of the violations that are being reported in the
paper and on the news? I want to know.

And he said, no, I have not.

I said, thank you.

Mr. Johnston. Mr. Wellington, look at the next page. Page 3 of
the memo from Black to you. On the top of the page, “Our ongoing
investigative plan involves the following.” And then go down to F.
“Continue telephone toll analysis.”

You are claiming that among the noncognoscente, meaning
myself, that I would assume that that would have another interpre-
tation than you going out in the open market and buying these
records from AT&T.

How long does that take you, to get current records from AT&T
as to phone calls?

Mr. Wellington. Mr. Johnston, I am not sure how long it takes
somebody who is purchasing these to get them, but again, to
me

Mr. Johnston. Thirty days?

Mr. Wellington. I don’t know. I have never gotten any in my
life.

Mr. Johnston. They are not cranked out until the billing is
cranked out, right?

Mr. Wellington. I don’t know what their billing cycle is.

Mr. Johnston. It is a monthly billing cycle. The pen register
would give it to you immediately. The bill you would have to wait
30 days for.

Mr. Wellington. That’s correct.

Mr. Johnston. Lund has pen registers; Lund is an employee of
Black, and Black has been in Hamel’s house, right?

Mr. Wellington. That is correct.

Mr. Johnston. No further questions.

Mr. Richey. Mr. Johnson, could I try and assist you?

Mr. Johnston. I will yield some of my time.

The Chairman. Your time has expired.

Mr. Johnston. My time is shot.

The Chairman. It is the intention of the Chair that this will be
the last panel, and that we will reconvene tomorrow morning at
9:45, in 1324, the Interior Committee Room, for the remaining wit-
nesses. We are running into conflicts here, and this is the easiest
way to deal with them.

Mr. Richardson. Excuse me, Mr. Vento.

Mr. Vento. Mr. Chairman, I have no questions.

The Chairman. Has everybody had questions on that round?

We have finished that round.

Mr. Taylor. I would like another when the time comes.

The Chairman. Sure. Mr. Hermiller, let me go back to the ques-
tion of launching this investigation. When did you inform Mr. Gari-
baldi of British Petroleum about this investigation? He is or was he
then the chairman of the Owner Companies group, is that correct?

Mr. Hermiller. That is correct, he was the chairman of the
Owners Committee.

I mentioned to Mr. Garibaldi that we were going to initiate an
investigation to try and determine where documents such as the

167

document that had been shown on the Scottish Eye program were
getting out of Alyeska, and that was probably contemporaneous
with the start of the activities.

The Chairman. It was specifically related to that type of docu-
ment —

Mr. Hermiller. It was related to leaks within — I think the way I
described it was, where are the leaks occurring in Alyeska.

The Chairman. How often did Mr. Wellington brief you on the
course of this investigation?

Mr. Hermiller. I would say typically it was every 2 weeks, per-
haps oftener. If, for example, in the month of August, when there
was more activity, it may have been once every week, but typically
1- to 3-week kind of timeframe.

The Chairman. And those briefings took the form of what? They
were done how?

Mr. Hermiller. They were done orally. He typically told me
what was going on in the investigation.

The Chairman. You share office space? Did he call you by
phone?

Mr. Hermiller. I think that sometimes it was just that we — he
would call and see if I were there, and come up for 10 minutes, and
we would talk.

The Chairman. And he would tell you what?

Mr. Hermiller. He would tell me what was going on.

The Chairman. And you would ask him what?

Mr. Hermiller. That’s correct. Oh, I would ask him what— cer-
tainly if he raised a point, there was further elucidation or further
discussion necessary, I might ask him questions, but typically he
reported to me about what was going on in the investigation.

The Chairman. Would you ask him about things that you
wanted done or suggestions you made about this investigation?

Mr. Hermiller. No, did I not. Besides framing originally what I
expected from the investigation in terms of its lawfulness, its focus,
certainly I did not try to in any way direct the investigation or tell
him which direction or what paths we should be following.

I have great respect for Mr. Wellington. He has been in the busi-
ness a long time, and he pretty much directed it for Alyeska.

The Chairman. Somewhere in this voluminous record there is a
discussion about — we had a hearing where you testified, and I
think I am characterizing this correctly, and please correct me if I
am not. And then there is a discussion apparently later about
whether you are going to be set up by me or the committee or what
have you, based upon your testimony. You learned about that how?

Mr. Hermiller. That was, I think, Mr. Wackenhut referred to
that this morning. I testified before your committee last March,
and I think one of the questions that you asked me at that time,
was there corrosion on the vertical support members along the
pipeline. Those are the more or less 80,000 or whatever there are
out there. And I responded that corrosion was not a problem on the
vertical support members.

I learned later on then that — and it came as a result of this in-
vestigation — that Mr. Hamel said he was going to get another hear-
ing scheduled, or you would schedule another hearing. At that time
you would ask me again about corrosion on the vertical support

members, and I would perjure myself, and at that point in time I
would be set up, or something.

The Chairman. But you came across that how? That was a
report from Mr. Wellington?

Mr. Hermiller. That was a report from Mr. Wellington.

The Chairman. What was your response to that?

Mr. Hermiller. My response was to find out immediately wheth-
er there was any corrosion on the vertical support members, be-
cause I had testified that there wasn’t, and that was my best infor-
mation.

The Chairman. And the outcome was what?

Mr. Hermiller. There is none. You know that we have some set-
tlement along — on the vertical support members, but typically that
is the only problem we have there.

The Chairman. Mr. Wellington, who else did you talk to within
the Alyeska Corporation about this investigation?

Mr. Wellington. At what timeframe, sir?

The Chairman. During the investigation. Did you just report to
Mr. Hermiller? Did you discuss this investigation with others? I
mean, you were now getting a flow of information, I assume, from
Mr. Black, I guess, who would be your conduit. Is that correct?

Mr. Wellington. Mr. Black was the individual that Wackenhut
had assigned to handle and supervise the case, yes, sir.

The Chairman. So is he your conduit to the investigation? Was
he your liaison or was Mr. Richey your liaison?

Mr. Wellington. Basically Mr. Black.

The Chairman. So as you received this information, were you
discussing this with anyone else?

Mr. Wellington. Basically, the procedure, Mr. Chairman, that I
set up, when we initially went into the investigation, was that Mr.
Hermiller would know. My immediate supervisor, the vice presi-
dent of administration, would have some general knowledge. And
one individual in my office would have general knowledge, just in
case I got run over or something happened to me. So those are the
people that were involved.

Did I answer your question?

The Chairman. Yes. Let me ask you this.

In an August 31, 1990, memo from Mr. Goodman to Mr. Richey,
he says, “According to Wayne, however, Alyeska has now decided
to change the proposed approach for dealing with Hamel. Now,
Wellington wants all of the information to be presented to the FBI
in Alaska for criminal prosecution of Hamel and others.” [See page
608, a.k.a. “PROSS” Memo.]

What does that mean? What were you looking for then? This is
now in August 1990.

Mr. Wellington. Yes, sir. When we had our strategy meetings
on the investigation, at Wackenhut’s corporate headquarters in
Coral Gables, and by then we had two attorneys from Florida, our
in-house counsel, Lon Trotter, one of our senior attorneys, we had
Peter James from the law firm in California onboard. At that time
we started talking strategy as to how we were going to proceed.

It was decided that because of Mr. Richey’s expertise at his law
firm in the criminal area, that they would take the material that

169

dealt with the criminal aspects of the case, and prepare it for pres-
entation to the appropriate Federal authorities.

Mr. James from California would prepare the appropriate legal
documents to be reviewed by Alyeska and the owners with the pos-
sibility of filing any civil suit. So that is where we were, and that is
probably what that is referring to.

The Chairman. Did Mr. James prepare that document?

Mr. Wellington. I believe Mr. James was in the process of pre-
paring the document. It is my understanding, Mr. Chairman, that
we have an owner company agreement where prior to filing any
lawsuit, we have to get permission from the owners. Mr. Hermiller
can probably address that better than I can.

I can go down and talk to the FBI, but in a case of this magni-
tude, we felt the owners needed to be involved. We were prepared,
Mr. Chairman, if you are trying to find out, we were prepared, and
it was my recommendation as a professional that we go to the FBI
and we go to court and we get our documents back and we pros-
ecute the people responsible.

The Chairman. I understand that. This day is starting to run to-
gether here, but one of you suggested in your opening statement
today that you decided at some point nothing much was going to
come of this, and you wanted it terminated.

Mr. Wellington. I think the point we got to was that we had
run the investigation for about 5 or 6 months, and collectively we
felt that we probably were about as far as we were going to get
with this investigation, so let’s split out the legal responsibility be-
tween our experts on the criminal side and our experts on the civil
side, and let’s go ahead and proceed to put the case in order so that
we can go to the appropriate authorities, file the appropriate law-
suits, and get the matter resolved.

We were prepared to go public. We were prepared to go public at
some point in time from the day that we started this.

The Chairman. And that was a lawsuit against whom?

Mr. Wellington. That would be a lawsuit against any individual
who our attorneys felt had violated our sixth amendment right to
counsel, whatever the case may be. We did not know at that time
who, but we were prepared.

All the evidence, all the evidence, sir, that we collected, was
going to have to stand up in a court of law because that is where
we were headed.

The Chairman. I understand that. What I am trying to deter-
mine is, that memo was to be developed for the purposes of the
prosecution of this case? I mean, as you pointed out, the intent of
doing all of this work was eventually you would be able to put to-
gether a case you could take to the authorities.

Mr. Wellington. Yes, sir.

The Chairman. So my question is, so who were you taking to the
authorities?

Mr. Wellington. At that time

The Chairman. What was the intent at that time?

Mr. Wellington. At that time, the individuals that appeared
from my perspective to have violated, and I am not an attorney,
violated the laws, were Mr. Hamel, possibly Mr. Scott, an employee
of Alyeska, those two individuals at that time.

170

The Chairman. Just those two?

Mr. Wellington. I believe those were the two at that time.
There was a couple of others that I would just as soon not — that
may have fit in that category.

That would have to be the decision of the prosecutor to make. I
wouldn’t want to make that.

The Chairman. Mr. Scott and Mr. Hamel were the subject of the
prosecution memo.

Mr. Hermiller, was this memo ever done?

Mr. Wellington. What memo?

The Chairman. The prosecution memo.

Mr. Richey.

Mr. Richey. No, sir, it was not.

The Chairman. If you can just tell us your involvement in this
decision.

Mr. Richey. What had happened was that we had had an earlier
meeting and we had had ongoing communications from Mr. Black
which Mr. Wellington was also receiving, with regard to what the
evidence was like, and at the September meeting we discussed it.

There came a time, and it is reflected in that memo there, I don’t
have it in front of me, whenever that time was

The Chairman. This is August 31, the memo. [See page 608.]

Mr. Richey. All right. And we had a meeting then scheduled in
September, for September 20, and when I received that memo from
Mr. Goodman, I very shortly thereafter sent a fax to Wayne Black
saying, I want transcripts properly prepared, the way he knows I
want them, which means that they have to be of the best quality,
he has to authenticate them, they have to be admissible in evi-
dence because I am not going to look at them except once, and he
has to put together a package for me.

The Chairman. Do we have that memo, do you know?

Mr. Richey. Yes, you have that letter. Some place in there is a
letter from me to Mr. Black saying, get me the transcripts as soon
as possible.

And then when we had the meeting on September 20, they were
busy and they didn’t have them yet. I guess Mr. Black had been
out of town or something about that time, and I again repeatedly
stated at the meeting on September 20, this is how I want the evi-
dence, this is how I want it done, I want the package put together,
and we will come out here, Goodman and I, and spend some time
at Wackenhut, because we want to keep the evidence there. I
didn’t want to potentially let things get out by having them down
in the lawyer’s office. We were going to do the work at Wackenhut.
We were going to put together a PROSS memo based upon our
judgment of whether it was there or not.

The Chairman. And the subjects of that PROSS memo were
whom?

Mr. Richey. Well, that would be determined after I reviewed the
evidence. But initially, Mr. Hamel, for an extortion and theft and
racketeering case.

The Chairman. And who else?

Mr. Richey. I didn’t have sufficient information

The Chairman. And Mr. Scott?

171

Mr. Richey. He had some information about Mr. Scott. I didn’t
know what I thought about that. And since we never put the pack-
age together, and never made the analysis, I don’t know what I
think about Mr. Scott. I don’t have any idea.

The Chairman. Did it include Members of this committee?

Mr. Richey. Absolutely not.

The Chairman. Did it include staff of this committee?

Mr. Richey. Absolutely not. Neither civilly nor criminally. The
civil suit was to get the documents back, that’s what was going to
be done; a civil suit seeking injunctive relief.

I had sent out to Mr. Peter James some papers in a case I
worked on which showed how to get an order from a judge and the
form an order from a judge could take to have the U.S. marshals
go into Mr. Hamel’s premises and seize the stolen documents with
a civil search warrant. I’ve done a number of those myself.

The Chairman. The PROSS memo is for the purposes of criminal
prosecution?

Mr. Richey. Yes, sir, there were two completely different con-
cepts, one civil, one criminal.

The Chairman. In Mr. Goodman’s memo, he says, “In order to
do so, we need to provide everything to the FBI on a ‘silver plat-
ter,’ ” which goes along with your earlier memo. “Wellington
wants to see how we would do this. Specifically, he wants us to de-
liver the PROSS memo, which we would deliver to the FBI, along
with . . . bodybugs, tapes, interview notes, seized documents, exhib-
its, etc.”

Mr. Richey. Yes, sir, that is exactly what we would have done.
As I mentioned earlier, we did that for a local Miami bank last
year. We gave a PROSS memo with all the information to the FBI,
and the man was indicted for bank fraud and is now in jail.

The Chairman. You are stating it was now the intent to exclude
any evidence or involvement with any member of this committee
or anyone else?

Mr. Richey. Nobody ever had any intention of pursuing this com-
mittee, and I don’t think I ever saw any indication, you know, suffi-
ciently strong.

Again, I had not reviewed the evidence. I’d have to go through it.
Today as yet I still have not looked at the tapes.

The Chairman. So you don’t know that because you haven’t re-
viewed the evidence?

Mr. Richey. With regard to the committee, that’s correct. I have
not looked at the evidence.

But it was my position to the client, stated about as strongly and
politely as I could say it in my May 22 memo, that I thought you
should keep away from the committee no matter what kind of
crimes may have been committed by the committee, that you
should avoid them at all cost.

The Chairman. Where is that?

Mr. Richey. I think that’s in the entire tone of what is said here,
that the risks of pursuing a Congressman, even if he has been in-
volved in criminal activity, are very great because a Congressman
has such power. Certainly that was my verbal statement. I think
the memo accurately reflects that tone. That certainly would have
been my recommendation to them. [See page 453.]

172

The Chairman. I guess I read your memo somewhat differently.
Obviously, since it is concluded that I am the involved party here. I
would say that first of all, several people have suggested your
memo was a cease and desist order, an absolute prohibition. In fact,
it is really not that. It is really not that.

Mr. Richey. No, sir, it is not. Basically the memo, was look, here
is what the problem is. If you think you want to do this, there
needs to be further research. If you think you want to do this,
there needs to be some substantial policy analysis and determina-
tion, and

That is extremely dangerous. Let us tell you why. Let us give
you some examples, and you ought to think this over carefully. Mr.
Wellington met with Mr. Black the day after it was delivered and
said I don’t need any more analysis. This has caught my attention
and we are not going to do it, period.

The Chairman. I find when I read your memo on page 5 and
elsewhere, really it appears to be much more of a road map
through a sticky thicket here.

Mr. Richey. I am sorry. I couldn’t hear.

The Chairman. In fact, you suggest there are problems. Obtain-
ing the necessary evidence to show the “Congressman did more
than simply receive documents stolen from Alyeska is an inherent-
ly difficult task because you must insure your investigators do not
interfere with a congressional investigation. The solution, of
course, to that problem, “It is essential, to counteract his self-serv-
ing attack on the investigation, that all communications with him
be tape-recorded and preserved in evidence.”

You claim there is another problem. “Before recording conversa-
tions, however, you must determine whether this type of electronic
surveillance is legal.” Then you give examples in Georgia and in
Florida, and go on to say, “Your ability to legally record and inter-
cept conversations with the Congressman will depend on the loca-
tion of the conversation.” These are red flags you are raising, cor-
rect?

Mr. Richey. And I think it is absolutely clear we try to give qual-
ity legal advice.

The Chairman. This is quality legal advice. If Mr. Black had
studied your memo perhaps more carefully, we wouldn’t all be
here.

Mr. Richey. I disagree, because it was clear to me, having been
present, having discussed with Mr. Black, having lived through this
investigation and actually being there, once this was called to ev-
eryone’s attention they wanted nothing to do with it. Mr. Black
said, thank you for calling this to my attention. I had no idea it
was a problem, and if we hadn’t come down here we might have
stepped in it.

The Chairman. If we proceed with your memo, you say, “It is
our understanding” — the firm’s understanding — “that conversa-
tions with the Congressman might take place in Washington, DC.,
Virginia, and Maryland. Recording conversations with one party
consent is legal in the District of Columbia and Virginia. It is ille-
gal in Maryland. However, the lawyers in our office are not li-
censed to practice in Washington, DC., Maryland or Virginia. We
believe it is essential to obtain expert opinions on the propriety of

173

recording and electronic surveillance from attorneys licensed to
practice in these jurisdictions. With the authorization of Wayne
Black, we have already taken steps to obtain these opinions.”

I appreciate your characterization of the memo. You are certain-
ly entitled to it. There is no quarrel there. I just suggest I don’t
think that memo is a cease and desist order.

Mr. Richey. I concur. I don’t give clients cease and desist orders.

The Chairman. You don’t, but you gave them a verbal one to
stay away.

Mr. Richey. First, I think the memo is clear no rational decision-
maker will read that memo and proceed with an investigation
against you.

The Chairman. We haven’t had the benefit of information neces-
sary to determine whether Mr. Black was rational or not. So we
don’t know.

Mr. Richey. I suggest to you that I have known him for many
years and he is extremely rational.

The Chairman. Mr. Hermiller, the decision to go to court to file
this suit is not a decision that is to be left with Mr. Wellington and
others. Is this your decision or the owners’ decision or their attor-
neys’ decisions?

Mr. Hermiller. It would be an Owners Committee decision.

The Chairman. What happened? This was brought to the
Owners Committee?

Mr. Hermiller. It was brought to the Owners Committee in Sep-
tember 1990. I wanted to proceed with at least civil action against
Mr. Hamel and get our documents back. In the meeting, however,
that option was not viewed with favor by the owners. I was told to
terminate the investigation as quickly as possible. That was on
September 25. Then on October 3 at a full Owners Committee
meeting, that was further reinforced. We had started to shut the
thing down after the September 25 meeting.

The Chairman. What did you bring to the owners? Where was
the owners meeting?

Mr. Hermiller. The September meeting was in Denver.

The Chairman. What transpired? The owners sit around a table
and you or Mr. Richey presented the case? Who?

Mr. Hermiller. Mr. Wellington and I and our general counsel,
Mr. Smith, were there and we talked to the owners about the in-
vestigation, showed them portions of a couple of the videotapes. I
think that was about it. The meeting lasted perhaps 2 hours and I
was given the instructions that I just relayed to you.

The Chairman. How did you present the case? What did you
present to them?

Mr. Hermiller. As I said, we talked about the evidence that
Mr. — or at least the information we had gathered on Mr. Hamel
and knew he was in possession of these documents. As I said, I
would like to have pursued civil action at a minimum against Mr.
Hamel, but that option was not agreeable to the owners.

The Chairman. Did you present a videotape to the owners?

Mr. Hermiller. There were portions, I think, of two videotapes
shown to the owners at that time.

The Chairman. Do we have a copy of those?

174

Mr. Hermiller. I will certainly ask our counsel to provide those.
I think they are in your possession at this point. I think you have
those.

The Chairman. We do not have those. We have requested those.
Those tapes showed what?

Mr. Wellington. Mr. Chairman, let me interrupt. Are you
saying you don’t have the tapes or do have the tapes?

The Chairman. My understanding is we do not have that tape
that was shown at the owners meeting.

Mr. Wellington. You have all of the tapes made during the in-
vestigation that were submitted.

The Chairman. Did you not make up a tape?

Mr. Wellington. No.

Mr. Hermiller. There were portions of two tapes shown.

The Chairman. You showed portions of the tape?

Mr. Hermiller. Correct.

The Chairman. What portions did you show?

Mr. Hermiller. Mr. Chairman, I don’t recall what portions were
shown, but there were portions of the tape shown where Mr.
Hamel made various kinds of statements about Alyeska. This is the
same kind of thing that I think ran throughout the content of all
the tapes. That is the sort of thing that was shown.

The Chairman. You don’t remember specifically what the sub-
ject matter was?

Mr. Hermiller. I think one of the things that was shown, as I
mentioned before, the allegations about corrosion on the vertical
support members. The assertions of toxic materials dumping at
Valdez. The assertions about corrosion on the pipeline. I don’t
recall all of the assertions that were made. There were, as I said,
several made. There are also some assertions about the Owner
Companies on the tapes.

The Chairman. What was the discussion at the meeting about
this committee, its staff or Members, myself included?

Mr. Hermiller. I don’t recall precisely any discussion about you
as an individual, as a part of this.

The Chairman. Mr. Wellington, you were there. Do you recall
any?

Mr. Wellington. As I recall, Mr. Chairman, once again, during
my presentation, which was rather short, we outlined the scope of
the investigation, as we have here. We also — I also briefly indicated
that your name had come up, but we had agreed early on in the
investigation that we were not going to get involved with any
Member of Congress or any of his staff people and that we were
going to stay focused on the original intent, and that was to try
and determine who was stealing our documents, and take appropri-
ate recourse. That, Mr. Chairman, was the essence of your name
being brought up by me at the meeting.

The Chairman. That was at the outset of the meeting or when?

Mr. Wellington. I wouldn’t say that — I wouldn’t give it that
much credit. I would say somewhere during the course of my pres-
entation your name was mentioned.

The Chairman. Yes, it apparently was, based on the notes of
people who were at the meeting, the attorneys. Along with the

175

owners, is it a Mr. Bilgore, he is an attorney for ARCO. [See page

609.]

Mr. Wellington. Yes.

The Chairman. He notes that they had “bad stuff on Miller” and
Ray Nye, who he notes was a “Hamel intimate.” Notes of Miss
Pace — Hamel is intimate with Ray Nye and, I guess, me. Is Pace
an attorney? That’s an attorney?

Mr. Wellington. Yes.

The Chairman. With Exxon; is that correct?

Mr. Wellington. Exxon.

The Chairman. Notes list Miller/Miller’s chief of counsel. Notes
later in the meeting on who Petrich is; Miller to become Chairman
of the Interior Committee, which is background. “To neutralize
Hamel we might make contact with Miller, EPA, etc.”

The review of this was undertaken by Paul, Hastings; is that cor-
rect, Mr. Hermiller?

Mr. Hermiller. That’s correct.

The Chairman. They asked him to review this whole situation.
In their document, I believe Bilgore, the in-house counsel for
ARCO, noted that throughout the meeting Alyeska felt it had done
well and was proud of its investigatory work. [See page 613.] They
hyped up the tapes as containing information exposing Hamel and
Petrich, the gentleman to my right, counsel for the committee, “as
forming a conspiracy with gross motives. However Bilgore felt the
tapes were only ramblings of a person and did not contain the in-
formation Alyeska had promised. Bilgore found the tapes disap-
pointing.”

That statement was in a series of interviews Paul, Hastings, et
al. did with people involved in this after the fact. Apparently all
the legal advice to the contrary, it still came up as late as the Sep-
tember 25 owners meeting, and the tapes were still being used as a
base to hype the investigation with the owners. Fortunately Mr.
Bilgore, I guess, and others were not persuaded — maybe you ought
to think about hiring him the next time around — and the owners
apparently decided to call off the dogs.

Nobody has told us quite why they decided that, except maybe it
was good judgment in this regard. You sat here all afternoon and
suggested somehow a firewall was developed between myself, the
committee and others during this investigation. Yet we find out,
after the firewall was supposedly developed and the person run-
ning the investigation was given a verbal don’t go near this, stay
away from this, that later in further documentation people are sur-
prised to see that we continue to see questions asked by Mr. Black
about the committee, Mr. Miller, Mr. Petrich, and others.

So for the last several hours we have listened to this discussion
and yet we find out at the crucial moment when the case has to be
made to the owners to go forward with the lawsuit or not, this in-
formation is now brought forth again.

We will discuss that with the owners, and if necessary, we will
discuss that with the author of these notes.

Now maybe they were just musing as we were told earlier today
and they just wrote my name down because it came into their
head. I don’t think that’s what these people were paid to do.

Mr. Hermiller.

176

Mr. Hermiller. Congressman — Mr. Chairman, throughout this
thing clearly there was to be no association with Mr. Black be-
tween you or any member of your staff. Hamel said these things on
tape. And I do think in this case some of these things are the mus-
ings of an attorney, particularly when you talk about a conspiracy,
a gross conspiracy — were those the words? I have not seen the doc-
ument you referred to.

The Chairman. That’s what he said. The tapes were being hyped
by, I assume, those presenting them as a means to do this.

Mr. Hermiller. The objective was a single objective, and that
was clear. To get our materials back to go ahead and sue Mr.
Hamel.

The Chairman. I understand that.

Mr. Hermiller. I don’t know if you do. Mr. Chairman, you have
made statements during the last 6 weeks, I watched you on 60 Min-
utes Sunday night, condemn me and Alyeska as criminals.

The Chairman. Uh-huh.

Mr. Hermiller. That is, as far as I am concerned, unjust to do
that before we even had a chance to come here today and have you
listen to us. We were very scrupulous.

The Chairman. As opposed to the characterizations of Mr.
Hamel that he is an extortionist and so forth by the counsel sitting
next to you, who said he only shook his hand yesterday. Yet you
have, again, the Paul, Hastings memo and others suggesting they
don’t see that at all.

Mr. Hermiller. Congressman, what you said Sunday night on 60
Minutes went out to how many millions of people in the United
States?

The Chairman. Oh, so it’s just a question of how far you broad-
cast it.

Mr. Hermiller. No, it is not.

The Chairman. Let’s lay down the gauntlet

Mr. Hermiller. You have condemned us before we have gotten
here. There is no reason for that. There is no reason for that. We
have scrupulously throughout this thing avoided the kind of con-
tacts that you are talking about here.

The Chairman. Mr. Hermiller, to your credit, I think you have
demonstrated to this committee your desire, you, Mr. Hermiller’s
desire to do that. That doesn’t mean that that necessarily was so.
You have demonstrated to this committee perhaps that Mr. Richey
had the same desire. That doesn’t mean it was necessarily so. We
also know the reality of what happens even with the best attorney
or the best corporate executive. A lot of it depends upon the other
party.

We all know that attorneys are constantly surprised by the ac-
tivities of their clients when they advise their clients not to do
something. As Mr. Richey is starting to find out, because you tell
your client not to do something, it doesn’t mean that that is the
case. We find in Government the same situation. Many, many at-
torneys are burned by their clients. Same thing, defendant is cau-
tioned: lie to your attorney and you go to the chair. In fact, people
do lie to their attorneys in capital cases.

Mr. Richey, you have dealt on both sides when you were in the
State’s attorney’s office and elsewhere. I think that is clearly the

177

case. I don’t question your intent, and I think that is why you said
earlier to one of the Members I will never do this again. This really
wasn’t worth the candle. I don’t question your intent at that point
at all.

But I am questioning this clean firebreak that is established. I
have no evidence that you in fact put me under surveillance, but I
don’t suggest for a moment that that wasn’t the intent of some of
the people involved in this operation, and I am not sure the fire
was extinguished. Yet when we go to the last crucial meeting,
tapes are being used apparently to hype Mr. Petrich and others, so
this committee is still involved in that process. I don’t question
your intent.

Mr. Wellington. Mr. Chairman, why would you call us crimi-
nals then if you haven’t seen any evidence before we ever came
here?

The Chairman. I think I have seen evidence that has only been
counteracted by Mr. Richey’s opinion of criminal activity undertak-
en with the surveillance of Mr. Hamel.

Mr. Wellington. By me?

The Chairman. We differ about that.

Mr. Wellington. By me?

The Chairman. You are an agent of the company. He is your
agent.

Mr. Wellington. No, I’m asking you a question. By me? Have
you seen anything that would lead you to believe Pat Wellington
committed a criminal act?

The Chairman. By your agent.

Mr. Wellington. By me?

The Chairman. No. You have to take responsbility for your
agent.

Mr. Wellington. You called me a criminal on TV.

The Chairman. No, I didn’t.

Mr. Wellington. You said Alyeska are criminals.

The Chairman. And you are Mr. Wellington.

Mr. Wellington. Well, who do I work for?

The Chairman. Well, the fact is you have to take responsibility
for your agents.

Mr. Wellington. I think you prejudged us before we got here
today. I think you owe an apology to me and my family for the
comment you made without legal proof. Half of the things that
were introduced today, if it were in a court of law, wouldn’t stand
up at all. And you’ve accused us of being a criminal.

The Chairman. Mr. Wellington, you sat here all afternoon and
also made allegations about other people. We heard the term “ex-
tortionist.” We’ve heard the term “stolen.”

Mr. Wellington. Who have I made allegations against, Mr.
Chairman? I didn’t use the word “extortionist,” the attorney did.

Mr. Richey. Mr. Chairman, may I address that? Let me make a
distinction. I was subpoenaed to come here today, and I didn’t want
to come. I am here against my will. My attorney-client privileged
documents I gave in secret have been passed out to the world now.
My advice to my client and my relationship with my client have
been put in a posture where the entire world knows that I tell my
client one thing and they want to do another. I must say this. This

178

whole situation with the statement to the public where you are not
under subpoena, are not forced to do it, is a little like Alice in
Wonderland and the Red Queen.

The Chairman. This is a lot like Alice in Wonderland.

Mr. Richey. It says to the jury, first the verdict, then the trial.
First the verdict, then the trial. And you made the verdict before
you had the trial. You absolutely did.

The Chairman. As you also have done with your opinions. You
made the decisions. Apparently your legal opinions provide you not
only defense and prosecution, they define a judicial determination
in each and every case.

Mr. Richey. I was brought here to give my legal opinions, which
you received. I didn't volunteer to come down.

The Chairman. And I am trying to establish that those are your
opinions, not necessarily facts.

Mr. Richey. Yes, sir, and I feel very confident in them.

Mr. Taylor. Mr. Chairman.

The Chairman. Mr. Taylor.

Mr. Taylor. I don’t think it was my turn. I wanted to know how
long each of us gets.

The Chairman. We are going to the next round. Mr. Young.

Mr. Taylor. Not that I am not having fun or enjoying this.

Mr. Young. Mr. Richey, I — my good friend from Oregon down
there is one of my greatest allies and great supporters. I got this
“Somebody’s Watching” magazine, Time, it says somebody is
watching how business, Government and even the folks next door
are tracking your secrets. [See page 632.] There has been some
question by the committee, how could the phone toll be obtained.
This is a direct quote.

“Computers have turned data collection into a $l-billion-a-year
industry that gathers financial records, medical history, and other
[professional and personal] information — even the record of every
credit card purchase. The data is then sold to marketers, mortgage
lenders, small businesses and individuals.”

That is a direct quote. I just bring that up because this is not a
big deal, it has been going on for a long, long time. Unfortunately I
get a lot of junk mail, a lot of phone calls, especially right at din-
nertime, soliciting me. I don’t know in the world where they got
my phone number, who they talked to, and they know my back-
ground. I don’t approve of that. I suggest you read that article.

Mr. DeFazio. If the gentleman will yield.

Mr. Young. I’ll even hand you the magazine. I get this; I don’t
know if you do.

Mr. DeFazio. I think they send them around for free, Don.

Mr. Young. I subscribe to mine. I pay for mine, it is not a perk.

Mr. DeFazio. I think they send them around free. I didn’t ask for
it, it just shows up in my office.

Mr. Young. If I can make it short, because I want to yield to Mr.
Taylor.

Mr. DeFazio. I would be happy to co-introduce with the gentle-
man some reasonable legislation to insure privacy of people in
these matters.

Mr. Young. You got it.

179

Mr. DeFazio. In this case it didn’t get to the point of find did not
mention phone records. We do have the letter from AT&T which
says this violates their policy.

Mr. Young. If you read the article it mentions phone numbers.

The Chairman. Mr. Young, you yield your time to Mr. Taylor.

Mr. Marlenee. Will the gentleman yield? The moral of the story
is don’t give anyone your Social Security number or allow your
Congressman to do it.

Mr. Taylor. I will remember that when the IRS asks for it.

I will return back to some of the basic questions I was pursuing a
moment ago. There are a lot of folks here. You can get folks lined
up to beat up on big oil companies. I’m troubled. I have been ac-
cused of bouncing checks at the Sergeant-at-Arms Bank, I don’t
even have an account there. I have been accused of not paying my
restaurant bills, $500,000 in arrears, I didn’t think you could eat
there without paying. Back home you couldn’t. The only person
who at home who thought I wasn’t guilty of bouncing a check was
my great aunt, she is 101 years old, she said she knew it because I
wouldn’t put money in an uninsured Yankee bank that paid no in-
terest and was run by the Speaker. She is the only one at home I
can go home and talk to.

Now it looks like I am going to be a part of a committee or ac-
cused of co-conspiring to accept stolen documents, whatever virtu-
ous motive they were used for.

And let me go back to that question of whether or not Mr.
Hamel knew the documents he was receiving or passing were
stolen. I would like Mr. Richey, if you would give some of the legal
advice everybody else has asked for, I might as well take advan-
tage. In that F2R412110 in the conversation Mr. Black says “how
in the hell did this person that got them to you ever get them out
of there?”

Mr. Hamel. “Well, that’s what I am nervous about where you
are going to have them, because that’s what life is all about.” That
one is sort of vague — this is Mr. Hamel again. “They are in-house
documents that came right out of Alyeska, it is because someone is
pissed off.” Then he goes on to say — Mr. Black I think is quoting
Mr. Hamel, and saying “your other lawyer said he didn’t ever want
to see them,” referring to these documents, “because they are
hotter than a firecracker.”

And then I believe Mr. Hamel says they all sit in the room and
say I can’t look at them — those documents, and then when I show
them the heading of each one, they say whoa. But Mr. Hamel says
I would find a way for them to have the benefit and I will say I
will figure something out for them to get the content of these docu-
ments without having to look at them.

Now in your opinion, does all that describe to you a piece of
stolen property or stolen document, or

Mr. Richey. It is additional admissible evidence through his ad-
missions of his state of mind. It is an indication he knows he has
stolen material and it is consistent with some of the other things
people have read earlier and with other evidence in the case.

Mr. Taylor. As we go on in the question of the attorney privi-
lege — client privileged documents, Mr. Hamel says he is in a situa-
tion where they are taking off the headers that State attorney-

180

client privilege — which usually is put on attorney privileged docu-
ments, is it not? He says, for example, down below I want to take
off — I am just going to cut out this heading that he has referred to
there. And he said “I would like to take that" — that is the attor-
ney-privileged headers “out of each page in your system,” referring
to the computer system where they have been entered.

Then Mr. Black asks the questions, he said yes, I took that one
off. Then he asked him about some others and he said then I reco-
pied some of these documents from the beginning — no, OK, I took
it off also. Which — then he orders on all the documents, cut them
out, each one.

What reason would you have for taking off the attorney-client
privileged headers in material, whether it be in the computer or on
the files?

Mr. Richey. Because you know it is wrong to have those docu-
ments.

Mr. Taylor. I think it would be very clear that Mr. Hamel recog-
nized, as he said he had, Alyeska property. And you know, as one
who remembers Kojak, when you said it is hotter than a firecrack-
er, that is euphemism for stolen, I always thought.

The Chairman. Kojak and criminal law.

Mr. Richey. It is an interpretation the courts will allow the jury
to read. In fact, you can sometimes get expert testimony on that.
Sometimes it depends on the facts.

Mr. Taylor. I would like to ask Mr. Hermiller. It has been said
Mr. Hamel has been a source of information for Congress and cer-
tain State and Federal agencies. Now what — he provided informa-
tion, I think, that resulted in an FBI investigation in 1985. What
was the result of that investigation?

Mr. Hermiller. Congressman, I am not familiar with that. I
can’t speak to it in any

Mr. Taylor. Mr. Wellington is raising his hand.

Mr. Wellington. Yes, sir. The contents of that investigation —
and I was somewhat involved in it, was Mr. Hamel — I will be very
quick — was alleging that Alyeska was providing oil to him with an
exorbitant amount of water in it. He apparently went around and
complained to numerous people here in Washington, DC. and even-
tually the FBI opened up a very extensive case. I believe it lasted
for about 6 months, and their conclusion of that case was that
there was not substantial evidence to support Mr. Hamel’s accusa-
tions against Alyeska, and they did not take the case to the U.S.
attorney for prosecution.

Mr. Taylor. I think there was a complaint in 1988 that went to
the Alaska Public Utilities Commission. What was the result of Mr.
Hamel’s complaint there?

Mr. Wellington. I am not as familiar with that one, sir, as I am
with the FBI case, but I understand similarly that an administra-
tive law judge gave a very lengthy opinion, and basically it was de-
cided in her opinion that Alyeska in fact had done nothing wrong,
and that Mr. Hamel was in error.

Mr. Taylor. I think it was 140-page opinion and said “finding no
evidence from Mr. Hamel’s claims against Alyeska on water oil
content.” There was a third one to the EPA I saw in the Anchorage
Times report that said EPA had closed a 3%-year investigation.

181

And the newspaper article itself said that Alaska — Alyeska Pipe-
line Service — EPA formally notified them it plans no further en-
forcement actions against the company. [See page 640.] What we
have been told basically, the problems have been taken care of if
there are any, or we were unable to substantiate the allegations.
This is from the head of the water permit division of EPA’s region-
al office in Seattle.

The Chairman. When was that?

Mr. Taylor. 1988. 1 will be glad to share this.

The — up from 1985-88 Mr. Hamel’s information just wasn’t bear-
ing too much fruit, he was providing to agencies, and I — did you
know — did any of these — were any of these tipping you off where
he was getting that information, or did that come later when you
thought that some of this sort of thing was coming from Mr.
Hamel?

Mr. Hermiller. Congressman, I didn’t arrive at Alyeska until
June of 1989. Maybe Mr. Wellington can comment on that.

Mr. Wellington. I believe, Congressman, that over a long period
of time that Mr. Hamel had bragged publicly he was receiving
Alyeska documents. It wasn’t just something that started a year or
two ago, it has been going on for quite some time.

Mr. DeFazio. Mr. Chairman — parliamentary inquiry, Mr. Chair-
man.

The Chairman. Yes.

Mr. DeFazio. There have been a number from that side. Regard-
ing the documents, are these records that were provided to the
committee? The statements about these? Are these in documents
provided to the committee previously?

Mr. Taylor. These have been passed out an hour or two ago,
were they not? Which documents are you referring to?

Mr. DeFazio. The ones that substantiate the actions of Mr.
Hamel.

Mr. Taylor. You are talking about the tapes?

The Chairman. I think he is referring to the EPA.

Mr. Taylor. I was reporting from newspaper records here. I
don’t know whether you have them or not. I will be glad to share
them with you and the chairman. I think the fact of these investi-
gations are part of the great pile of material we have.

Mr. DeFazio. If you will state the source.

Mr. Taylor. Be glad to share this. This is the Anchorage Times I
was reporting from. I will pass it over. I don’t know now many
people read it. I would say it is fairly public.

The Chairman. We have an agreement here we try to use docu-
ments that are of record in the committee so both sides have an
opportunity to review the records.

Mr. Taylor. Thank you, Mr. Chairman. I would like to make
that a part of the record.

Finally, Mr. Richey, there was a question in your statement
about Mr. Hamel’s activities about his — the possible extortion or
things of that nature. You had read, I suppose, F2R412079, the con-
versation we went over back earlier — I think it has already been
passed out to the committee — where Mr. Hamel pretty much points
out — and I can quote from him, when they were asked about mate-
rial, whether or not he would be discovered — about the source for

182

this material, and after using a few comments he says, no, I think
that when they know that it is me that’s done this they are going
to pay me quicker. Is that one of the sentences you might be rely-
ing on to assume?

Mr. Richey. That is one of a number, Congressman Taylor. There
were a number of sentences and discussions throughout and con-
versations with Mr. Black. There was some conversation with an
Alyeska lawyer out in Washington State also.

Mr. Taylor. That is about six pages of documents that sort of
leads up to the fact that he certainly wants this pressure brought
so that they will pay him quicker in his settlement. I won’t read all
six pages.

Mr. Richey. Absolutely, and the idea that you are utilizing some
sort of cover of a just cause to commit extortion is not a defense. A
number of years ago in Florida I prosecuted a lawyer who was ex-
torting a local developer, and I charged the lawyer with extortion
because he went to the developer and said you are going to hire me
as your lawyer and you are going to give me a big retainer and you
are going to pay me so much money. If you don’t, I will organize
protests against your development. I’m going to go to the planning
and zoning commission. I will file environmental complaints. I’ll go
to the county commission, and I will shut you down. He raised all
kinds of defenses when we prosecuted him of his first amendment
rights and he was a good guy and everything else, but he was con-
victed and the Supreme Court of Florida sustained that conviction.

Mr. Taylor. There was another statement I saw that I couldn’t
quite understand, F2R411221 — I don’t think, Mr. Chairman, that
has been made a part of the record — it is just one sentence I was
looking at, where Mr. Hamel says, "Now here is what you are
going to have when I make my peace, if I ever make my peace with
them and they pay me. What they are paying me for is not the en-
vironment. They are paying me for my water in the oil.” I want to
ask Mr. Hamel about that.

But it sounds — it— throughout I see a number of those sentences
that shows an unusual concern for him to be paid for the wrong he
felt had been done to him at some point down the road, and clearly
he wanted to bring all the leverage he could in order to force as
quick a payment as possible. There are other references here where
he talks about when they pay me — in one case I think he was plan-
ning, and I probably should cite that — I believe that is
F2R411029 — I don’t believe that has been passed out as part of the
record, but he refers that he is going to place someone on this com-
mittee’s payroll and make them a Member or see that they are
made a Member of the committee, and they would come there for
$1 and he would pay that person himself. And he refers to when I
get my money from Exxon, which is about 3 or 4 weeks from now. I
presume he was a little optmistic in the timing, but he thought he
would have resources there to cover the salary for someone to come
on this committee.

The Chairman. Can the gentleman tell us again — can he identify
what you are reading from? We have been passing out all the docu-
ments the Members have been reading from, we don’t have them.

Mr. Taylor. The last two

183

The Chairman. There are five Members here and you are going
to offer us a copy.

Mr. Taylor. Earlier they passed out several of these pieces.

The Chairman. To whom?

Mr. Taylor. I think the whole committee.

The Chairman. We have been passing out all documents.

Mr. Taylor. F2R411029, that was the cassette number.

I guess what 1 am saying is that throughout the reams of this
transcript it is hard for me to read them and not get the clear un-
derstanding that Mr. Hamel, number one, realized he was receiv-
ing stolen documents, that he was passing those same documents
on and he didn’t want to — whether wanted — whether this commit-
tee knew about it is something that we probably have to deter-
mine, but he clearly knew himself they were stolen. He also
wanted to use his activities as leverage to see that he received
some financial settlement from the action he had brought.

Mr. Richey. I believe the evidence of that is overwhelming in
this record.

The Chairman. Mr. Taylor, that is your conclusion from the
reading.

Mr. Taylor. That is my conclusion.

The Chairman. That is your conclusion, Mr. Richey?

Mr. Richey. Yes, sir, and I told the client that long ago.

The Chairman. Will the gentleman yield?

Mr. Taylor. Yes.

The Chairman. Again referring to the Paul, Hastings review of
this, “One of the things discussed at the August 3 meeting was
whether Hamel was interested in taking Alyeska’s money and
dropping his environmental claims. (Wellington noted this never
was established in taped conversations.)” [See page 659.] He’s not a
strong defender.

Mr. Richey. Unfortunately, I suppose Mr. Wellington and I
never went chapter and verse over that because my request for the
transcript preparation and the rest to do with the PROSS memo
was never finalized when the investigation concluded. I think that
my PROSS memo would have persuaded Mr. Wellington.

The Chairman. It goes to the question of people forming these
opinions and these conclusions.

Mr. Taylor. Well, Mr. Chairman, I didn’t — I am not absolute-
ly —

The Chairman. The gentleman has another minute. We’ll rotate.

Mr. Taylor. Sure. I am just — that last response, I think the com-
ments I have quoted a moment ago, it is hard to interpret when
someone says I want them to know I am doing this because they
will pay me quicker if they find out I’ve got all this stuff and I am
able to release it, I am doing it. That is about as clear as you can
get, but I could be mistaken, I have been before.

Thank you, Mr. Chairman.

The Chairman. Can the staff identify where this came from just
quickly?

Mr. Taylor. These, from the minutes?

The Chairman. What you just read from. This is not a transcript
that was offered to us from the subpoena. This has been recreat-
ed — retyped — contrary to the agreement here. Mr. DeFazio.

184

Mr. DeFazio. Thank you, Mr. Chairman. Just to clarify the
record, although my colleague from Alaska is gone, there is one
reference in the story on phones, it says to identify the source of
the leak, Cincinnati Bell

The Chairman. Let’s stipulate Time magazine.

Mr. DeFazio. The gentleman misread it. Cincinnati Bell, acting
in response to a grand jury subpoena, searched the phone records.
That’s a little bit different than what we are talking about here.
There is one other inference that could be perhaps used too, it says
some smaller outfits also have a reputation for selling personal
data to people who may have no business seeing it. Everyone from
private investigators to bill collectors and spurned lovers. I would
say that is what we are dealing with here.

Mr. Richey, back to where we left off quite some time ago, the
May 22, 1990 memo which has been the subject of considerable dis-
cussion. I will try to be brief. Three sections I want to refer to. The
first is page 3.

Mr. Richey. Sir, can you give me a moment. All this stuff has
been passed out, and I’ve got it all over the place.

Mr. DeFazio. The chairman spent a lot of time. May 22, 1990.
Attorney-client privileged information, confidential. The one you
were concerned about being made public.

Mr. Richey. Thank you, where are you?

Mr. DeFazio. Page 3, third complete paragraph. [See page 455.]
The — after the colon, which is the third line, the third word begins,
“does the photocopying of documents and distribution of them to
the media and others constitute the crime of theft?” And you go on
to discuss that.

Mr. Wellington has made allegations of theft of documents, or as-
sertions I should say, not allegations, assertions of theft of docu-
ments. And you go on in the second paragraph to give an opinion
on Florida trade secrets law, but you say we have not researched
the specific laws of Alaska, Washington, DC., Virginia, Maryland
or other jurisdictions.

Two things: One, I find it peculiar, because the whole justifica-
tion for going forward with the surveillance and theft of documents
from Mr. Hamel’s home is they were stolen. Yet you don’t render
an opinion here on whether or not photocopying documents and
distribution of them is a crime in Alaska where I assume Alyeska
is not headquartered down in Florida. It is one State where it is
warm down there and we aren’t pumping too much oil.

Can you tell me, did you subsequently research Alaska on this
subject and render an opinion to Mr. Black?

Mr. Richey. No, sir, I would have done that at the time I did the
PROSS memo. I would note that, on the first page, as I noted earli-
er, very last line, “We believe neither Alyeska nor its agents
should approach the Congressmen as part of an undercover oper-
ation until these issues have been adequately researched and ana-
lyzed.” So we contemplated this was done in a very short period of
time. We would have liked to have had more facts. We would like
to have had more time. But on the basis of the opinion rendered in
a short time they took our advice and didn’t proceed, any way we
understood.

185

Mr. DeFazig. OK. Mr. Wellington, you said documents were
stolen. Were they photocopied and distributed or the original docu-
ments actually stolen? You said “stolen” very clearly.

Mr. Wellington. I believe all the documents that I saw, sir,
were photocopies of original documents.

Mr. DeFazio. OK, does the photocopying of documents and distri-
bution of them to the media and others constitute the crime of
theft in the State of Alaska?

Mr. Wellington. Yes.

Mr. DeFazio. OK, thank you. Mr. Richey, page 6: “We believe” —
page 6, top of the page, again, “we believe” — second sentence begin-
ning “we.

“We believe it is essential to obtain expert opinions on the pro-
priety of recording and electronic surveillance” — well, I guess — all
right, “recording and electronic surveillance from attorneys li-
censed to practice in those jurisdictions.”

Did you do that?

Mr. Richey. I made a telephone inquiry which sustained my view
and I discussed with the client getting that in writing, which I
would have preferred, and they said they believed that it was suffi-
cient.

Mr. DeFazio. OK.

Mr. Richey. I believe it is accurate. Our view was accurate. It
was sustained in the telephone conversation.

Mr. DeFazio. Are you aware of the recordings made when Mr.
Hamel was walking about in the park with his cellular telephone?

Mr. Richey. No, sir, I am not aware of telephone recordings
made when he was walking around the park with a cellular phone.

Mr. DeFazio. This is from earlier testimony, he was frequently
recorded from a recreational vehicle while walking about the park
using a cellular phone, and what means were used? Mr. Wacken-
hut was not familiar with it. Mr. Black did not discuss it.

Mr. Richey. My understanding is that that did not happen, but I
have seen no evidence of it, I have seen no indication. You have a
bunch of disaffected employees here who have their own personal
problems, some of which are pretty severe. I see no indication of
that.

Mr. DeFazio. I don’t know, this allegation of severe personal
problems I think is an unwarranted slur on the earlier testimony
and

Mr. Richey. Don’t those witnesses indicate some of them they
were about to be fired or they were having trouble with their su-
pervisor?

Mr. DeFazio. A number were handled through what I would con-
sider to be extraordinarily slipshod personnel policies, and given
dismissal notices on very short period of time, having to do with
objecting to things they consider to be illegal. I guess if you think
you can force someone to do something illegal in the workplace and
they should say yes, sir or no, sir, then perhaps they were disaffect-
ed employees. I consider them to be perhaps more upstanding citi-
zens than the investigators that stayed on staff and your buddy Mr.
Black.

Finally, just on the — you know, I guess it is extraordinary to me
somehow I am supposed to read this memo and find — again I

186

search for the assertion that you should not investigate Mr. Miller
or Members of Congress. It says “we look" — the final paragraph,
page 10, “we look forward to working with you and other Alyeska
officials on the sensitive important matter. We look forward to
working with Mr. Black . . . encourage Alyeska to do an internal
investigation regardless of whether you decide to proceed with an
investigation into allegations concerning Congressmen." I guess I
would read the memo one that provided ambiguous advice and/or
said more research was required.

Nowhere do I see an assertion you should not go forward regard-
ing the Members of Congress. I mean, there is — it can’t be — it can’t
be inferred. It can’t be explicitly read. I suppose if I billed by the
hour or by the page, you know, I might write a memo like this. If I
was trying to tell someone not to go forward, I would tell them not
to go forward.

Mr. Richey. I think the advice is crystal clear, and I think Mr.
Wellington understood it and he understood it so well he promptly
adopted the advice.

Mr. DeFazio. It is puzzling at the owners’ meeting discussions of
Mr. Miller took place.

Mr. Richey. I think they would be required in any sort of honest
statement to the owners to tell them Mr. Miller’s name came up.

Mr. DeFazio. It is funny the notes don’t show all discussion and/
or investigation of Mr. Miller was stopped at the advice of our at-
torney subsequent to the directive of Mr. Wellington and Mr.
Black.

Mr. Richey. I am sorry. Is that what it says?

Mr. DeFazio. No, it doesn’t say that anywhere.

Mr. Richey. I don’t know what it says. I haven’t seen it.

Mr. DeFazio. Thank you, Mr. Chairman.

The Chairman. Thank you. Mr. Richardson.

Mr. Richardson. Thank you, Mr. Chairman. Mr. Wellington, I
would like to refer to two memorandums that you have sent Mr.
Black, and they are contained in, I believe, documents that you
have. These are handwritten memorandums that you sent Wayne
Black, Feb. 23, 1990, and it refers to a person by the name of Fre-
dericka Suzann “Riki” Ott. [See page 661.]

Are you familiar with that document?

Mr. Wellington. Can I take a look at it, please?

Mr. Richardson. I believe it is in your packet.

It is number one. Let me just read it to you. You will be receiv-
ing it.

Mr. Richardson. It is a memo to Mr. Black from you. “This girl
has been a real pain in the — . She is very active in all Alyeska
issues. Right now is spending a lot of time in our State capital
working the legislative scene. I think she is also receiving inside
info from us. Pat.” Feb. 23, 1990.

What prompted this memo and what was the result of this
memo?

Mr. Wellington. During the course of the investigation, sir, it
was evident that Mr. Hamel had associated himself very closely to
Ms. Ott, and there was an article, I believe, that accompanies this,
and I basically xeroxed the article and sent it down to Wayne for
general investigative information; in the event her name came up

187

during the course of his investigation, that he would be familiar
with who the lady was.

Mr. Richardson. Did you ever investigate her?

Mr. Wellington. Did I ever investigate her?

Mr. Richardson. Or anybody associated with Alyeska?

Mr. Wellington. What is your definition of “investigate”? If you
have a document you are referring to, sir, if you would let me look
at it I will tell you.

Mr. Richardson. The document I am referring to, you have it in
front of you. It is from Mr. R.B. Iversen to you and it is background
information on Fredericka Suzann “Riki” Ott.

Mr. Wellington. Yes, I am familiar with that document. What
would you like to know?

Mr. Richardson. I would like to know the answer to my ques-
tion — who is Mr. Iversen?

Mr. Wellington. He works for me.

Mr. Richardson. Did he undertake this investigation of Freder-
icka Suzann “Riki” Ott at your request or is there a memorandum
that you keep in your files, or what?

Mr. Wellington. What the request was was to determine wheth-
er or not the information that Riki Ott was talking about and the
credentials that she said she had, it was strictly a routine review to
see if the individual was reported as she indicated she was, with all
her degrees and all her expertise. That’s all it was.

Mr. Richardson. So what? So what if she is a MA as opposed to
BA or Ph.D.? Why would you care to know that?

Mr. Wellington. I did this at the request of our vice-president of
engineering, Mr. Henman. He wanted to know, because the individ-
ual was appearing at a lot of public hearings, touting a lot of cre-
dentials, did she in fact have the credentials she said she had. A
logical conclusion — if someone tells me they are a doctor, I think I
want to know about it before I go in, look at their certificates on
the wall.

Mr. Richardson. Does that give you a right to get information
about her private life, her boyfriend?

Mr. Wellington. I don’t see anything in here, Mr. Congressman,
that would be private.

Mr. Richardson. Well, I urge you to read it. I am not going
to

Mr. Wellington. If you have something you want to be specific
with, be specific and I will answer your question.

Mr. Richardson. You want me to be specific?

Mr. Wellington. Sure.

Mr. Richardson. “Met partner at Seattle boat show.” She and
her boyfriend — “ Together they own and operate a 27-foot bow
picker, the Ambergris.’ ”

Mr. Wellington. I bet everybody in Cordova knows that. Where
she lives. It is a small town.

Mr. Richardson. Why does Wackenhut need to know that?

Mr. Wellington. Need to know what?

Mr. Richardson. Need to know about the boat?

Mr. Wellington. What I provided, again, Mr. Richardson, to
Wackenhut was general background, common knowledge informa-
tion on individuals who reported to have an association with Mr.

188

Hamel. I would consider this to be a professional investigative lead
that needed to be followed. That is all. Nothing sinister. Just a pro-
fessional investigative lead.

Mr. Richardson. Did they ever follow it?

Mr. Wellington. I don’t know. As I recall — and I haven’t seen
the documents in a long time, sir, I don’t recall whether or not Mr.
Hamel’s name or Ms. Ott’s name ever came up in any of the con-
versations with Mr. Hamel. I wouldn’t be surprised if you told me
it had.

Mr. Richardson. Let me refer to the memorandum which is also
in your packet dated Feb. 23, 1990 from you to Wayne Black.
“Letter from Mr. Hamel to Robert Horton,” vice-chairman of Brit-
ish Petroleum. Do you have that? [See page 677.]

Mr. Wellington. Yes.

Mr. Richardson. All right. In your handwritten memorandum to
Mr. Black you say as follows: “Note his remarks” — referring to
Hamel — “about having early information regarding oil spill drill.
Pat.”

Mr. Wellington. Yes.

Mr. Richardson. What does that mean?

Mr. Wellington. As I recall, and I haven’t read the letter for a
long time, but as I recall in the letter, Mr. Hamel was indicating
that he had received prior notice that there was going to be an oil
spill drill from somebody, maybe DEC — I don’t know where it came
from.

The Chairman. Did he receive prior notice or the people running
the drill receive prior notice?

Mr. Wellington. He must have received notice, or the people
did. I don’t know. Is there some paragraph in here?

Mr. Richardson. No, my question is this: We are establishing
that the purpose of looking into Mr. Hamel was purloined stolen
documents; correct?

Mr. Wellington. Yes.

Mr. Richardson. Does that investigation you conducted of Mr.
Hamel broaden into much broader issues such as oil spill drill, or
are we talking about a wide-ranging investigation of this individ-
ual, or we just talking about issues relating to purloined docu-
ments? I mean, there is some legitimate — you are familiar with the
Whistleblower Act, are you not?

Mr. Wellington. I understand there’s a whole bunch of Whistle-
blower Acts, and they have been explained to me in some detail,
yes.

Mr. Richardson. My question is in this memorandum are you
suggesting that the investigation of Mr. Black be broadened?

Mr. Wellington. No.

Mr. Richardson. I don’t understand “Note his remarks about
having early information regarding oil spill drill.” [See page 677.]

Mr. Wellington. I think again, trying to point out that there
was information that was going to the gentleman. I think a very
logical professional investigative lead.

Mr. Richardson. Let me ask you about Trustees for Alaska. That
came up also. Some of my colleagues asked you about that, Pat.
Are you familiar with the organization?

Mr. Wellington. Generally.

189

Mr. Richardson. Are you aware this is a law firm that repre-
sents clients in litigation?

Mr. Wellington. I found that out recently.

Mr. Richardson. What was the purpose of the surveillance of the
Trustees for Alaska?

Mr. Wellington. First of all, I did not authorize that, Mr. Rich-
ardson. When I found out about it, I stopped it.

Mr. Richardson. Who authorized it?

Mr. Wellington. I would assume Mr. Black did.

Mr. Richardson. My understanding is it was to uncover the
source of a diagram of Alyeska’s ballast water treatment plant sup-
porting facilities in Valdez — alleged.

Mr. Wellington. I don’t have any general knowledge of that. It
is my understanding, Mr. Congressman, that there was a diagram
that was released to the local newspaper, handwritten diagram,
which I think was some subject of some conversation here which
we investigated. Also the fact the documents that were recovered
in the impounded vehicle that the burglar was driving around in
Anchorage, they were addressed to Mr. Hamel in care of Trustees
of Alaska.

Again, I think a logical investigative lead. Here is an individual
in Virginia getting back from EPA documents from Alyeska as-
signed to Trustees for Alaska. When I found out about it, I didn’t
agree with it. I said don’t do it again, period. That’s the end of it.

Mr. Richardson. Let me ask you about Price Ahtna.

Mr. Wellington. They are a contractor at Valdez.

Mr. Richardson. It is my understanding that Price Ahtna was
identified as a suspect based on the May 23 memo from Wackenhut
to you, to Alyeska. Is that correct?

Mr. Wellington. During the research of our internal toll tele-
phone calls, our telephone toll calls, it appears as if two or three
calls, maybe four or five, I could be wrong, was going from a Price
Ahtna telephone at the Alyeska terminal — they were at that time
a general contractor for us — going to, I believe, Mr. Hamel or out-
side.

That was the sole involvement with our contractor on our prop-
erty.

Mr. Richardson. They are a Native Corporation, basically, with
business ties to you?

Mr. Wellington. Right.

Mr. Richardson. They work for you?

Mr. Wellington. Yes, they do.

Mr. Richardson. So why were they targeted?

Mr. Wellington. Because their phone number, as we made a
random check of phone numbers — of known phone numbers, theirs
came up.

Mr. Richardson. Were they ever investigated?

Mr. Wellington. Beyond that? No, sir.

Mr. Richardson. Well, there is a declaration of friendship, a
friendship treaty of May 19, 1990, between Price Ahtna and
Alyeska. [See page 681.] It strikes me as a little odd that they
would be targeted. But you are saying it was based on

Mr. Wellington. Wait a minute, sir. I didn’t say they were tar-
geted. I said that we checked on phone calls going from their office

190

on our property outside. We found a couple that looked suspicious,
or maybe four or five. I wouldn’t want you or anybody else to leave
the room thinking that Price Ahtna, who has a very good relation-
ship with this company of ours, that they were ever a target of the
investigation.

The fact that they are a native corporation, they are a very fine
one, they do good work for us. They were not a target at any time.
And I wouldn’t want anybody to get that impression from your
conversation with me.

Mr. Richardson. I have one final question to Mr. Richey.

Mr. Richey, I have in front of me a memorandum from Jonathan
Goodman to you, August 21, 1990. Do you have that?

Mr. Richey. I will see if I can get it.

Mr. Richardson. It is document number 26. [See page 682.]

Mr. Richey. Yes, sir, it was just given to me. May I have a
moment to see what it is?

Mr. Richardson. Yes.

Mr. Richey. Yes, sir.

Mr. Richardson. On page number 3, Mr. Richey, would you ex-
plain — I am just a little bit confused here. Let me just read you the
last — next to the last paragraph. “Wayne has already made photo-
copies of the stolen attorney-client documents, which Hamel pro-
vided to him. Wayne and his company will be inputting these docu-
ments into their litigation support computer system. He is sup-
posed to return these attorney-client documents to Hamel within a
few days. According to Wayne, Hamel said that the Congressman
does not yet know of the stolen attorney-client documents — but his
legislative assistant does know about them. According to Wayne,
Hamel claims that a Dept, of Justice attorney may want to review
these stolen attorney-client documents. Hamel said the DOJ attor-
ney quickly thumbed through some of those documents when
Hamel presented them to him. Please give me your comments
about the investigation.”

Now, could you place this conversation in the context of the dis-
cussion that earlier took place, I believe between the chairman and
you, on when did Mr. Hamel know and how much did he know?

Mr. Richey. When did Hamel know what? I am sorry.

Mr. Richardson. I just read you what — why don’t you explain
what this paragraph means. What are we talking about?

Mr. Richey. As I understand it, part of what was occurring here
is that the ruse to get Hamel to turn over bit by bit the attorney-
client privileged documents, we were trying to understand what he
had, trying to see if there was some way, by reviewing the docu-
ments themselves, to trace them back to a source, and that kind of
thing, the ruse used to try to get the company’s stolen documents
back was that they were going to put it into some sort of computer
system in order that it could be further analyzed and studied and
made more sense of, because there was so much volume, something
like that was sort of the idea.

And the last part of the paragraph is that Wayne is updating
Jonathan Goodman that Hamel continues to do what we have
asked Wayne to try and avoid having him do that he really can’t
keep him from, that he continues to talk about various and sundry

191

people, and again, aside from Hamel saying these things, I don’t
have any indication that they are true.

Mr. Richardson. So what happened next after that?

Mr. Richey. When is this? Let me look at my time sheets. That
was the 21st. Apparently Mr. Goodman had dictated a memo on
the status of the investigation, which I take it is this memo — and I
am reading, sir, from our billing sheets to Alyeska pipeline, and I
am taking it chronologically.

Mr. Goodman, the rest of that day, with regard to this matter,
called and left a message for Pat Wellington. Had a telephone con-
ference with Pat Wellington regarding his suggestion that counsel
begin drafting affidavits. Then a couple of days later, I reviewed a
memo, and I had a conference with Wayne Black regarding status.
Both reviewing the memo and the conference were 18 minutes, so
it was a short memo and a short conference, whatever it was.

That same day, Mr. Goodman read and reviewed investigators’
reports regarding undercover meeting. So apparently Goodman and
I probably read the same memo. His was two tenths, probably, you
know, 10 minutes, 12 minutes to read it, 15, who knows.

On the 27th of 1990, there is a telephone conference with investi-
gator Wayne Black with Goodman. On the 30th there is a tele-
phone conference with Wayne Black, reundercover investigation on
possible criminal case. On the 31st, conference with Black, re needs
for PROSS memo, prosecution memo, draft memo with Wayne
Black. That was with me on the 31st.

So I guess on the 31st is when I sent this letter I mentioned to
you earlier, saying, all right, if you want a PROSS memo, I have
got to have the tapes right away.

Mr. Richardson. And that’s when the tapes were provided?

Mr. Ritchey. No, what I said in terms of the tapes is, I want the
tapes prepared so 1 can review them.

What is required for them to be prepared for me to review them
is transcripts of good quality have to be made. The tapes and the
transcripts have to be reviewed jointly by a person participating in
the conversation, that means Mr. Black. Mr. Black has to go over
every one of those and authenticate it, turn it into what it is that it
actually says from the person participating, and certify that to me
so it is authenticated to my satisfaction before I even willing to sit
down to look at them. That is the way I do it.

The Chairman. Mr. Marlenee.

Mr. Marlenee. I thought it would never come. I will be very
brief, Mr. Chairman.

Mr. Richey, one of the previous witnesses made a comment about
the MITI software. Was fraud committed when Black obtained that
software?

Mr. Richey. No, sir, there was not. What was occurring there
was, at the time that that occurred, Mr. Hamel had indicated he
had some sort of ownership interest, partial at least or some sort of
ownership interest in MITI to Mr. Black. And in addition to that,
he had indicated that some of the documents, the attorney-client
privileged documents, stolen documents, had been placed into the
database of MITI, and there had been some convers ation that Mr.
Hamel had a modem and MITI had a modem and MITI is over in

192

Washington, and Hamel is over in Virginia, and they would use
wires back and forth to transfer this information.

That was to be pursued and investigated to find out if that could
be confirmed. But that was what was in Mr. Black’s mind at the
time he struck his deals with MITI, and when we had a meeting, it
is reflected some of the notes we discussed, in fact, making MITI a
defendant in the litigation, because if, in fact, it had been true —
and I don’t know the final results of the investigation — but if the
initial information from Mr. Hamel was correct and MITI was
doing the things Hamel said it was, then MITI would have been a
defendant on a wire fraud count.

Mr. Marlenee. Thank you, Mr. Richey.

Time after time, the liberals of this Congress have made it easier
and easier for companies like Wackenhut and other investigative
firms, banks, credit bureaus, credit unions, you name it, to obtain
our social security numbers. I made that statement previously,
somewhat in jest, but with tongue in cheek, that this Congress has
abused our privacy as citizens by allowing various uses of the social
security number, that originally was supposed to be a very person-
al and confidential number. Now, all of a sudden, Members of Con-
gress have become very hypersensitive.

I would ask the question, have we become a body beyond ques-
tion, beyond investigation, beyond evaluation, an imperial court, if
you will? If, in fact, an individual, an organization, a corporation,
or any entity, for that matter, is being opposed by a Congressman
or a Senator, or there is reason to suspect that they are opposing
and are trying to stop a project or opposing some effort, does that
citizen have the right to evaluate, investigate, or even question the
Congressman’s position and his motives?

If researching, doing opposition research were a crime, every po-
litical candidate in the United States would be in jail, and yes, the
Congressmen themselves, virtually every one of them would have
violated laws.

Mr. Richey, I have never been an attorney, and I don’t ever hope
to be. I am just a commonsense guy from off the farm in northeast-
ern Montana. But being an exception, I have been in that private
sector, gotten involved in business, and I have hired lots of legal
counsel time and time and time again.

I am guilty of paying you people too much money for your
advice.

Mr. Richey. I object, Congressman.

Mr. Marlenee. We do pay for your advice, and it would be very
foolish for me to ignore that advice. And it would be very presump-
tuous of you to presume to tell me what I should or shouldn’t do. I
hire you to lay out the parameters of where we are at, and that is
a business, personal decision that I have to make on the evaluation
that you lay before me.

It would have been very foolish indeed, and I think that every-
one who read that memorandum could assume, if they had any
common sense and business sense, that it would have been very
foolish of your client to ignore those red flags that you wave that
said this could be construed as interfering with a congressional in-
vestigation, an obstruction of trying to get to the facts.

193

But if, in fact, it were simply a matter of trying to evaluate what
your opponent was doing and where the information was coming
from, that is an entirely different matter. And I think that partial-
ly, that is the crux of what we are trying to get at here today, if I
am not — at least in the testimony that I have seen.

My esteemed chairman, 1 do not question his motives in having
the investigation, but let me say that there are some dark horses in
the background, and I hope that this clears it up.

And I yield back the balance of my time.

The Chairman. A couple of points here. Excuse me.

Mr. Vento. I was just going to ask a couple of questions, Mr.
Chairman.

The Chairman. Here we go. Hold on to your horses, gentlemen.

Mr. Vento. I will just be very brief, Mr. Chairman. If I can get
some answers, I think I can be very brief.

The Chairman. That is a threat. You don’t know Mr. Vento.

Mr. Vento. Mr. Hermiller, did you report these activities or
these missing documents as criminal activities to the law enforce-
ment officials in Alaska or other places?

Mr. Hermiller. No, we did not.

Mr. Vento. Why not?

Mr. Hermiller. I wish, as I have said before, I wish we had, but
we didn’t.

Mr. Vento. I haven’t read sill of this, so maybe this is something
that has been repeated before, because, you know, in reading this
document, Mr. Richey’s famous document here, it looks like about
10 pages, I read it all very carefully, 10 pages exactly, and I guess
you can look at this as either a glass of water half full or half
empty. [See page 453.]

The way I look at this, it looks like a blueprint of how to proceed.
I notice that it talks about Mr. Miller being an attorney, it talks
about how you have to proceed, you have to walk a narrow line,
how to be involved in terms of it. That is how I read it. It is a blue-
print, with benchmarks as to what you have to do in order to satis-
fy the law, and that is how I read it.

Now, someone else may read it as saying, Don’t go into this at
all, don’t do it.

Mr. Richey, how long have you been employed in this particular
task? Are you on retainer for Alyeska and The Wackenhut Compa-
ny?

Mr. Richey. Mr. Vento, I have never represented Alyeska before
or Wackenhut before.

Mr. Vento. Are you still employed by them at this point?

Mr. Richey. Every time something new happens in this case and
I am dragged in, they pay for my time and expenses, but my in-
volvement with this matter was terminated basically at the time
the investigation was closed down.

Mr. Vento. So you are still on retainer concerning this particu-
lar issue?

Mr. Richey. I have never been on retainer. I have always
charged them by the hour for whatever it is of my time that they
take, which is a standard way of doing this.

Mr. Vento. So this relationship began in — relationship
began

194

Mr. Richey. On May 17, 1990, when Mr. Black telephoned me.

May I comment, sir, about whether that is a blueprint and what
could have happened?

Mr. Vento. When I ask you some questions, you can. I just want
to be very brief about it.

I think we can sit and debate that, I suppose, for some time, in
terms of legal ramifications, but I think that it is — you know, I
tried to read it very carefully, and read it both ways, to see if I was
really missing something in terms of this, and, you know, I really
don’t see how it could be read any other way but how to lay down
the procedure to make whatever effort you make successful as a
consequence, whether the subject was George Miller or the subject
was somebody else.

Do you want to comment on that, Mr. Richey?

Mr. Richey. Sure. When we do a legal memorandum for a client
and they are asking our advice about what is involved, we try to
cover all the bases. We try to say good points, bad points, hypothe-
tical up, hypothetical down. We go all the way around the circle.
That is our job. We provide quality legal services. And if we had
wanted to write a blueprint for what to do, I know how to write a
blueprint for how to conduct an investigation.

And in addition, Mr. Vento, I would note that if the goal here
had been to investigate the Congressman and we wanted to do it,
Mr. Black is phenomenally capable and very creative, and I believe
that the Congressman’s staff and the Congressman would have
been in Mr. Black’s clutches in a manner of days. And he decided
not to do it and didn’t do it.

Mr. Vento. That is a comforting feeling.

Mr. Richey. He is one of the finest investigators I have ever
seen. He’s very creative, very capable.

Mr. Vento. I am just suggesting that as I look at it, it didn’t
seem to — I didn’t r€ ad the same sort of firewalls or whatever admo-
nition was given verbally. All I know is what is here in black and
white and what you have said basically at the hearing. I haven’t
had the time to review this in detail, but it talks about — it talks
about what buttons you have to push, where the land mines are in
terms of legality of it. So I will leave it at that.

Now, this was received, of course, by Mr. Wellington and Mr.
Hermiller, I guess, and others, and I guess the question is really,
how did they interpret it. They probably have answered that a
number of times.

So I will just yield back the balance of my time.

Mr. Hermiller. Congressman, I never saw the opinion letter, but
I would like to repeat, I don’t care what the opinion letter said re-
garding the investigation of Congressman Miller. We were not
going to do it. We were not going to participate in that kind of ac-
tivity.

The best evidence I can give you that the chairman was never
the subject, is my recommendation to the Owners Committee that
we go ahead and sue Mr. Hamel. I was certainly not concerned
about this information, the documents that were generated, being
made public.

195

Mr. Vento. In any case, I think the ball was up on the tee here
as far as I can see, and maybe if someone decided to proceed, this
was the method they had to proceed in order to do it legally.

Mr. Vento. Mr. Wellington

Mr. Wellington. I received that memorandum and I flew to San
Francisco and met with Mr. Black and Mr. Bernstein at The Wack-
enhut Company. I didn’t want to handle it over the telephone, be-
cause I wanted to handle it with them face to face, that we are not
investigating anybody from Congress or any other staff people, and
I am here to tell you that. And I understand what the memo says,
and that is fine, we paid a lot of money for it, but I am here to tell
you what our company policy is, and that is what I told him in no
uncertain terms, got on the airplane and went back home.

Mr. Vento. We appreciate your testimony and your advice on
that.

I might say, being investigated and being scrutinized kind of
comes with the territory around here, as you can see from my col-
league behind me talking about that. But I think obviously the ex-
traordinary nature of this does deal with special responsibilities
that we have. But nevertheless, as I said, I think it can be read cer-
tainly both ways.

But I will yield back my time at this time, Mr. Chairman.

The Chairman. Thank you.

Mr. Wellington, did you during the course of this investigation
ever ask Mr. Black to ask any questions of Mr. Hamel?

Mr. Wellington. Ask any questions of Mr. Hamel?

The Chairman. Any specific questions of Mr. Hamel?

Mr. Wellington. Yes, I think I asked him if through his inter-
views with Mr. Hamel, if he could find out who was stealing our
documents.

The Chairman. That would be the only question you asked him
when you asked about this time?

Mr. Wellington. I don’t recall any others. Probably, you know,
you are talking about something happening a year ago. I wouldn’t
be a bit surprised that maybe there was other things that we
talked about. But again, I want to make it very plain, Mr. Chair-
man, we focused our investigation on the theft of our property and
the recovery of it in order to prepare for civil suits.

The Chairman. I understand.

During the surveillance, Mr. Hamel talks about Exxon sea cap-
tains and what may or may not be going on on the Exxon ships
with respect to dumping of ballast waters and so forth. Did you
ever discuss that with Mr. Black?

Mr. Wellington. Yes.

The Chairman. Did you ask Mr. Black to ask any questions
about that?

Mr. Wellington. Basically, Mr. Chairman, my instructions to
Mr. Black was that we wanted to stay as far away from activities
as we could, but if he had specifics, specific information, then to go
ahead and take that.

I am not the investigator for all seven owner companies. My re-
sponsibility is with Alyeska. If you looked at the tapes, Mr. Chair-
man, you find Mr. Black says, Good morning, Hamel talks for 3
hours, and Mr. Black says. Goodnight. That is about the extent.

196

Now, there is a few questions in there and there is a few com-
ments.

The Chairman. That is your characterization of the tape. On
some of the tapes there are very specific questions about ongoing
activities by Exxon and others.

I am asking you whether or not you asked Mr. Black to ask any
specific questions with regard to that.

Mr. Wellington. With regard to what? The Exxon Valdez?

The Chairman. No, to the points that were being raised in the
tapes with respect to Exxon captains and activities aboard those
ships.

Mr. Wellington. I think my response to that would be to Mr.
Black, that if he has hard evidence, if there is something he can
bring forth, go ahead. But again, our focus is this. Mr. Hamel is a
very, very difficult individual to follow. He is very proud of his as-
sociations with a lot of people and doesn’t mind talking about
them. On an airplane with a woman he barely met he starts talk-
ing about our private company business.

The Chairman. Did you ever communicate with anyone at Exxon
about anything you learned on these tapes and during this surveil-
lance?

Mr. Wellington. No, sir.

The Chairman. No one at Exxon?

Mr. Wellington. No one in any of the Owner Companies, includ-
ing their security people.

The Chairman. All right.

So there was no discussion about the Department of Justice or
questions to be asked about the Department of Justice by you of
Mr. Black, Mr. Hamel?

Mr. Wellington. Again, you obviously are referring to some-
thing that I don’t have in front of me

Hie Chairman. No, I am just referring to a question. It is my
question.

Mr. Wellington. There was, I believe, Mr. Chairman, there was
a discussion concerning the referred to Scottish Eye legal document
that Mr. Hamel supposedly had showed that to Department of Jus-
tice attorneys who were involved in litigation against Alyeska and
Exxon, and they said, We don’t want to look at it, or something to
that effect. That was the conversation, as I recall it.

He apparently had taken it to the Department of Justice and
they didn’t want to look at it, and they shouldn’t have, because it
was a privileged legal document.

The Chairman. In the Paul, Hastings memo, there is the recita-
tion that you told them in the interview that you knew that Exxon
was not going to be the subject of a grand jury investigation of
Alyeska, from sources that you had. Who were those sources?

Mr. Wellington. What was that comment again?

The Chairman. That during the interview with the Paul, Hast-
ings firm that was doing the overall discussion of this activity, that
you told them that- —

Mr. Wellington. Do you have a specific reference that I
could

The Chairman. Yes, I do. On the J. Patrick Wellington inter-
view, this is page 8 of the Paul, Hastings memo that was given out,

197

at the bottom. [See page 650.] It says, “Wellington did not believe
that there were any specific investigations of Alyeska made or
pending during the time period of the Wackenhut investigation. He
said the information was that the Department of Justice and the
Federal grand jury were not looking at Alyeska during the period
from March to September 1990. He said that, in fact, his ‘sources’
told him that Alyeska was not the target of a grand jury investiga-
tion in the oil spill.”

Mr. Wellington. And your question is?

The Chairman. Who were your sources when you were talking
about a grand jury investigation?

Mr. Wellington. As I recall, when I talked to Paul, Hastings
back in November of last year — and I have never, except for about
2 days ago, have I ever seen this particular document, and I have
never had an opportunity to authenticate it. I believe that a more
correct analogy was that I was aware from general conversation in
Alaska that Alyeska, I believe, at the State level, the grand jury
was not going to be — the grand jury was not going to be convened
to investigate us. I don’t think there was a State grand jury going
on at that time.

The Chairman. So this statement is inaccurate? Was this a Fed-
eral grand jury with respect to the oil spill.

Mr. Wellington. As I recall, I think it was a State grand jury. If
there was going to be a State grand jury.

The Chairman. So are you saying this is inaccurate?

Mr. Wellington. What I am saying is that, as I recall, I was told
that there was not a State grand jury convened to investigate
Alyeska. That much I recall telling him.

Mr. Richey. Mr. Miller, could I comment, Chairman Miller,
please, for a moment, on the accuracy of these Paul, Hastings, Jan-
ofsky interviews?

I would like to use my own as an example. They came up and
interviewed me in my office several miles away from the Wacken-
hut office, on the 31st floor of the Southeast Financial Building,
and the lady who did this didn’t even know where she was. She in-
dicated she interviewed me out at Wackenhut’s offices.

Apparently these things were typed up some 6 weeks after the
actual interviews occurred, and they were never sent back to any
of us to say, Did you misspeak or did I misunderstand or is there
an ambiguity here.

And when I went through the Paul, Hastings material this past
week, I was just stunned with what they said, because it is highly
inaccurate, and the legal analysis in the final memorandum was to-
tally deficient.

The Chairman. That is fine. Peter James, in notes provided to
the committee, says that he is the LA attorney, I believe?

Mr. Richey. Yes.

The Chairman. He says, “We want to establish that Hamel has
been providing work product to the Department of Justice.”

Why would that be the case? Why would it be so important to
establish that with respect to the Department of Justice?

Mr. Richey. I don’t remember that ever coming up in any way.
He may have had discussions with other persons about it. It is the
first time I have ever heard of it.

198

You would have to have Mr. James, one, if he said that, and if
so, what the context was. I am not aware of it.

The Chairman. Mr. Hermiller, do you know why that was being
said?

Mr. Hermiller. I think that it would disqualify or prejudice fur-
ther prosecution by the Justice Department of Alyeska.

The Chairman. Of the oil spill?

Mr. Hermiller. I think that is the context.

The Chairman. Or of the settlement?

Mr. Hermiller. I don’t recall, but I think my general counsel at
the time expressed to me some concern about that. He expressed it
in that way, that somehow this would prejudice future DOJ ac-
tions. I guess my only reaction to that was, I had some concern
about whether this was something that we needed to reveal.

The Chairman. Fairly serious ramification, isn’t it?

Mr. Hermiller. I am not a lawyer. I guess at the end of the day,
the consensus was that it was not, but certainly my general coun-
sel —

The Chairman. The largest oil company in the world is before
the Justice Department; you have ongoing information being re-
ceived about this committee, about allegations, about documents;
Mr. Hamel has a fairly substantial and accurate track record of
providing information to the EPA, to clean water and clean air, to
this committee, to the Senate committee, to others; and now all of
a sudden the question is whether or not this investigation may be
used to prejudice the Department of Justice investigation somehow.
That is the Big Leagues, as they say.

Mr. Hermiller. That is what my general counsel indicated to
me. He felt — first of all, he couldn’t believe that anybody in the De-
partment of Justice would look at this stuff.

The Chairman. Why not? The people at EPA did, and you ended
up changing your ballast water system and your clean air system,
and spent $900 million on the pipeline. You told this committee
you had no problem.

Mr. Hermiller. I think the distinction there is there are docu-
ments and there are documents. Documents that you referred to
here, Mr. Chairman, I think are, as I characterized them, operating
documents or operating information. I don’t even know that those
were turned over to the EPA and in any way resulted in the kinds
of expenditures you are talking about. Certainly they were not
$900 million.

The Chairman. What are you spending on the pipeline to fix cor-
rosion?

Mr. Hermiller. I am talking about things that Mr. Hamel, you
said, brought to the EPA. Mr. Hamel did not bring the corrosion
issue. We brought — Alyeska brought the corrosion issue to the at-
tention of the regulators, and could not even get anybody in 1988
to — or certainly in the spring of 1989, or late 1988, there was not
any interest in it.

As I have testified before, it was after the Exxon Valdez spill
that the interest in the corrosion on the pipeline was made much
more acute.

The Chairman. Yes, because that goes to the question of who
was operating the system and how they were operating it, because

199

what the Exxon Valdez spill showed was in fact the system wasn’t
in place. That is why you were brought on board, Mr. Hermiller,
because in fact it did not exist at that point.

Mr. Hermiller. All 1 am saying, Mr. Chairman, is that we had
developed the technology to detect corrosion. I think we still are on
the leading edge of that technology. Detecting corrosion in large di-
ameter pipelines, to within 10 percent of wall loss, this is the best
technology in the world, and it wasn’t until we got some of that in
place that we really

The Chairman. I understand that. That doesn’t go to this.

A lot of opinions have been bandied around here about whether
or not this was all engaging in extortion or not, and back and
forth. Then this question starts to be raised, that this surveillance
now has something to do with the Department of Justice investiga-
tion.

Mr. Hermiller. No, I don’t think that is true at all. It was a
comment that Mr. Hamel made. And as I say, I think we were
all — we could not believe, much as I said before, I can’t believe that
this committee would accept attorney-client privileged documents. I
can’t believe that the DOJ would accept them, either.

The Chairman. You raised that point. Let me ask you a ques-
tion.

I have a document here to Pat Wellington from Rick Lund and
Gary Krep. Neither one of them is an attorney. Mr. Lund is not an
attorney, and Mr. Krep is not an attorney. At the bottom of this
document it says, “THIS DOCUMENT IS ATTORNEY-CLIENT
PRIVILEGE.” [See page 483.]

Mr. Hermiller. I am not familiar with that.

The Chairman. You have neither an attorney nor a client here. I
am just pointing out that a lot of discussion has been going on here
about attorney-client privilege and the fall of Western Civilization
if attorney-client privilege isn’t maintained.

This is sort of like doctors giving you the extra x-ray. The fact is,
as we all know, almost everything now attorneys do, whether or
not they are going to look at it, is going to be labeled attorney-
client privilege, even when it is not. They assume it is going to pro-
vide some kind of protection.

So, you know, just to keep going on about the attorney-client
privilege doesn’t necessarily make it so.

Mr. Marlenee. Will the chairman yield? I am no attorney, as I
have stated before.

The Chairman. Apparently nobody in this room is an attorney.

Mr. Marlenee. I have people in Montana who I am representing
to the Social Security Administration.

The Chairman. Oh, my God.

Mr. Marlenee. I don’t have a client relationship with those
people. »

The Chairman. It is called

Mr. Marlenee. I don’t want that stuff revealed.

The Chairman. It is called attorney-client. It is not, I am acting
as an attorney or I am playing attorney. It is attorney-client.

I also find it interesting, again, when we get down to the discus-
sion of Mr. Hamel and the transcripts, people who have yet to see
the tapes have now made conclusions. Mr. Wellington may be

200

closer to the truth on those conclusions. But we have now Mr.
Black in his wrap-up memo, after October 5, he says, “Now my di-
lemma, I have come to know and understand Hamel. He has con-
vinced himself that he is a saviour of Alyeska,” maybe Alaska, I
doubt if he is a saviour of Alyeska, “and possibly the planet in the
fight against pollution and all that is wrong with big oil. He is in
his own right a folk hero in Alaska. Even if he receives his $18 mil-
lion settlement from Exxon, he still will have his source and funnel
information to EPA, the media and everyone else who will listen
for as long as he, Hamel, lives.” [See page 687.]

So again, you have drawn these conclusions about extortion. This
was a man who was in the room to get him to do such things, and
that is not what is driving this man.

Mr. Richey. I disagree. That is not inconsistent. He is trying to
use this to get his $18 million, and if he is going to continue or not
continue it doesn’t change the fact that he is using these unlawful
methods trying to extort money.

The Chairman. I am suggesting it is not the driving force.

Mr. Ritchey. It doesn’t matter if he has multiple forces. Part of
his force is to use these means.

The Chairman. That is gross

Mr. Richey. We are all getting to the point where it is 6:30 in the
evening. We have been here a long time. If he has multiple mo-
tives, I would note if his motive is to use these means to drag $18
million out of these people, that is highly improper.

The Chairman. Was there ever a question in either of you gen-
tlemen’s mind that Mr. Hamel was in fact a source to the EPA, to
the Senate, to the House? Did you know he was providing informa-
tion to committees?

Mr. Hermiller. No. Certainly, Mr. Hamel had publicly stated he
provided information to regulatory

The Chairman. He is on the front page of the paper, 1988, telling
you guys. [See page 640.] He is writing you letters and telling you.

Mr. Hermiller. Mr. Chairman, my experience with Hamel — by
the way, I never heard of Hamel either until I came to Alaska, and
I am sorry I never heard of you until I came to Alaska, but I found
out quickly who both of you were. But prior to 1989, I don’t know
what Hamel’s activities had been. I know he had provided materi-
al, as I say, to various regulatory groups.

The Chairman. Mr. Wellington, did you know Mr. Hamel was a
source to congressional offices, committees, or Congress, the EPA,
to others?

Mr. Wellington. Only what he said.

The Chairman. Only what he said?

Mr. Wellington. Only what he said.

The Chairman. What was your conclusion?

Mr. Wellington. Well, he said it on tape, and

The Chairman. On which tape? These tapes?

Mr. Wellington. Yes. And that he had provided information to
various agencies. He said it in the paper. And I took it for face
value.

The Chairman. He said it in correspondence to people at
Alyeska. Aren’t there letters written where he tells you flat out
that he has gotten information from the company, that there is a

201

question of bypassing pump stations or stations where you measure
the output or the outflow and who is going to pay and all those
kinds of things?

Mr. Hermiller. I am not familiar with those. They may exist,
but I am just not familiar with any written communication from
Mr. Hamel.

The Chairman. Mr. Richey.

Mr. Richey. Let me draw your attention to — the purpose here
was to identify our leaks, was what the whole thing started out
with.

The Chairman. I draw that distinction.

Mr. Richey. And you know Hamel wound up being in the middle
of this, and in order to get those documents back, that was to be
the civil lawsuit, it was to get the documents back, which were at-
torney-client privileged.

I had never heard of Mr. Hamel before, I didn’t know anything
of him and any agencies whatsoever until this investigation start-
ed.

The Chairman. You’ve been asked severed times, Mr. Hermiller.
I have just got a couple of questions left. I look at the file that
Alyeska Pipeline kept on Mr. Hamel, letters and correspondence to
Mr. Thomas at EPA, to the newspapers, to law reporters, to Con-
gressman Dingell, to Congressman Studds, on and on and on. This
was pulled by your files. [See page 690.] And then I think some
things you pulled in response to correspondence by him and so
forth.

Why didn’t you go to the district attorney? Why didn’t you go to
the attorney general?

Mr. Hermiller. Mr. Chairman, this — I am not even familiar
with this file. To the best of my recollection, I have never seen this.

And as I have said before, the question of why we didn’t go to
authorities sooner, I have already indicated to you, I wish we had.
And believe me, if I am involved in one of these again, which I am
not planning to be, that certainly is where we would go with it.

The Chairman. You had the handwriting sample of Mr. Scott at
the outset. Your analyst said it looks like this guy did the docu-
ments. You have the statements of Mr. Hamel in the press and
elsewhere. You have the statements in correspondence. Why didn’t
you go to court?

Mr. Hermiller. We should have. We should have gone to the au-
thorities early on in this thing.

The Chairman. As we know, if you were trying to break the
bonds between this committee and Mr. Hamel, or the Merchant
Marine Committee or Senator Johnson’s committee or somebody
else, you don’t have to sue B to get B. Sometimes you can sue A
and get B. If you were trying to taint Mr. Hamel to stop people
sending him documents

Mr. Hermiller. Believe me, there was never any intent on our
part to break these bonds you are talking about.

The Chairman. No, no. I’m just saying, I don’t understand how
this thing got to this point.

Mr. Hermiller. It was a concern of mine, obviously, that Mr.
Hamel had these documents, but it was not so much what he was
doing with them.

202

We were trying to work our way back to where those documents
were getting out of Alyeska. That was the objective of this thing.

The Chairman. Let me ask you one final question. Why did the
owners call this off? What did they tell you? You run Alyeska for
them. Correct?

Mr. Hermiller. That’s correct. As I mentioned, in the September
meeting, they wanted the investigation shut down. Mr. Wellington
and I had already agreed that as far as we were concerned, there
was nothing more we were going to learn.

I recommended, wanted, to proceed with civil litigation. The
owners did not want to do that. They wanted it shut down.

I think that their concern was that here was, as I have said
before, a big company conducting an investigation, creating kind of
a police force to go out and police a private citizen. They found
that unacceptable, and wanted the operation terminated.

The Chairman. Mr. Wellington, let me ask you a question. I be-
lieve it was during January, it may have started a little bit some-
what earlier them that

Mr. Wellington. What year?

The Chairman. 1991. When we had the discussions about the
GAO audit of the TAPS security. [See page 707.]

Mr. Wellington. In your office? Yes, yes, I remember that very
well.

The Chairman. Was this surveillance discussed before you came
down to that meeting, by your parties?

Mr. Wellington. I think you have the record there. We visit
with you — we met with the Owners, I believe, in September, is that
correct?

The Chairman. I don’t have the record here.

Mr. Wellington. We met with the owners I believe in Septem-
ber, in Denver, and then that would have been September 1990,
and then I met with you along with several other Alyeska people
in January 1991, concerning your request for the GAO to do a secu-
rity audit of the pipeline, yes, sir. And your question was

The Chairman. The question was, did you discuss this surveil-
lance with your parties before you came into that meeting or
around that issue of the GAO audit?

Mr. Wellington. Surveillance of what

The Chairman. The ongoing surveillance, was that discussed at
the time that you were then

Mr. Wellington. I think if you will recall from the record, Mr.
Chairman, I testified that the surveillance was — the investigation
was terminated on September 1990. I met with you in January of
1991.

The Chairman. I understand that.

Mr. Wellington. There was no investigation.

The Chairman. So the question of whether or not the GAO
would trip across this investigation was not of concern to you?

Mr. Wellington. I never even thought about it, to be honest
with you. I never even thought about it. No.

The Chairman. Did anybody else think about that when you
were asking to redesign the GAO investigation?

Mr. Wellington. Never a discussion with anybody along that
line, period.

203

The Chairman. All right. Thank you very much for your testi-
mony.

As with the other panels, the committee will reserve the right

Mr. Marlenee. Mr. Chairman, I have one question.

Mr. Young. You are going to make an enemy out of Mr. Young,
and he is not an attorney, either. You can’t make an enemy out of
an attorney because someday he might represent you. But, go
ahead.

Mr. Marlenee. I address this to Mr. Richey. As an attorney,
is

The Chairman. Wait, who is the attorney here, we have to estab-
lish the privilege.

Mr. Marlenee. Counsel, I will call him counsel. I am hurrying,
Mr. Young, esteemed colleague.

Mr. Richey, is this investigation compromising your ability to go
to court to obtain relief for your client?

Mr. Richey. I would think a situation like this, where everything
that you have had from the beginning — yes, sir, and that a situa-
tion like this where every communication with the client back and
forth from the beginning of time to the present, between the law-
yers and the clients, that you compromise the client’s legal posi-
tion, absolutely, yes, sir.

Mr. Marlenee. Thank you.

I thank the chairman for yielding.

The Chairman. Whoa, it is not that easy in the land of the law.
You had already made a decision, the owners had made a decision
you weren’t going to go to court.

Mr. Richey. I understand that is correct.

The Chairman. Who is your client?

Mr. Richey. Alyeska.

The Chairman. Alyeska. They are bound by the decision of the
Owners Committee, as I understand it.

Mr. Ritchey. I have no idea.

The Chairman. It is important to know.

You just answered that this investigation compromises your
right to go to court on behalf of your client.

Mr. Richey. The statute of limitations has not run. If they
change their mind — as I understand it, one of the bases of not
doing this was that they didn’t want to embarrass you. The statute
has not run. All of this is out now. If they want to change their
mind, they are compromised.

The Chairman. This may help them go to court. Just a joke, just
a joke. I wanted to see if you were listening.

Thank you very much. It has been a long day. We appreciate
your help.

Tomorrow the committee will reconvene in the House Interior
Committee room at 9:45.

[Whereupon, at 6:35 p.m., the committee was adjourned, to recon-
vene at 9:45 a.m., on Wednesday, November 6, 1991.]

ALYESKA PIPELINE SERVICE COMPANY
COVERT OPERATION

WEDNESDAY, NOVEMBER 6, 1991

House of Representatives,

Committee on Interior and Insular Affairs,

Washington, DC.

The committee met at 9:50 a.m. in room 1324 of the Longworth
House Office Building, the Hon. George Miller (chairman of the
committee) presiding.

The Chairman. My understanding is that the Minority Members
are on their way. I think we should go ahead and start to take your
testimony.

We have kept you gentlemen waiting now longer than any of us
had expected. It is sort of like in college. There was an unwritten
rule, was there not, that if the professor did not show up in 10 or
20 minutes, you could leave? I always left in 10 minutes. I think
the rule was 20 minutes. You have been waiting a long time to tes-
tify, and I think we will go ahead.

The committee will reconvene for the purposes of continuing our
oversight hearings on the Alyeska Pipeline Service Company covert
operation.

The first witnesses that we will hear from are in a panel: Mr.
Fred Garibaldi from British Petroleum America, former chairman,
Owners Committee of the Trans-Alaska Pipeline System; Mr. Dar-
rell G. Warner, president of the Exxon Pipeline Company; and Mr.
William C. Rusnack, president of the ARCO Transportation Compa-
ny.

Gentlemen, welcome to the committee.

It is the practice of this committee to swear all witnesses who
appear before it at investigative hearings. Do you have any objec-
tions to being sworn?

Mr. Garibaldi. No, sir.

Mr. Warner. No, sir.

Mr. Rusnack. No, sir.

The Chairman. Please stand and raise your right hand.

Do you solemnly swear or affirm that the testimony you are
about to give is the truth, the whole truth, and nothing but the
truth?

Mr. Garibaldi. I do.

Mr. Warner. I do.

Mr. Rusnack. I do.

[Witnesses sworn.]

The Chairman. Thank you.

( 205 )

206

In order to inform you of your rights as a witness before the com-
mittee and the limitations on the authority of the committee, the
Rules of the House of Representatives and the committee are on
the table in front of you. Both sets of the Rules have previously
been provided to you.

You are advised of your right to counsel. The role of counsel
would be to advise you of your constitutional rights.

Do you desire to be represented by counsel?

Mr. Rusnack. Yes, sir. We are represented by Mr. Robert
Jordan, sitting to my left.

The Chairman. Mr. Jordan. Thank you.

Mr. Garibaldi, we will begin with you — or, however you want to
proceed.

Do you have a joint statement?

Mr. Jordan. Mr. Chairman, we thought perhaps — we sort of
structured it in a way that if Mr. Rusnack goes first, we think it
will be shorter. The others can sort of fill in the gaps, if that is all
right with you.

The Chairman. Fine. Proceed however you would like.

PANEL CONSISTING OF WILLIAM C. RUSNACK, PRESIDENT, ARCO

TRANSPORTATION COMPANY; FRED GARIBALDI, BP AMERICA,

FORMER CHAIRMAN, OWNERS COMMITTEE OF THE TRANS-

ALASKA PIPELINE SYSTEM; DARRELL G. WARNER, PRESIDENT,

EXXON PIPELINE COMPANY

Mr. Rusnack. Thank you very much, sir.

Mr. Chairman, Members of the committee:

My name is William C. Rusnack. I am a senior vice president of
Atlantic Richfield Company, and I have been President of ARCO
Transportation Company, a Division of Atlantic Richfield, since
August 22 of 1990.

I also serve as ARCO’s representative on the Owners Committee
of the Alyeska Pipeline Service Company.

As of January 23, 1991, 1 became Chairman of the Owners Com-
mittee. ARCO first learned of the Wackenhut investigation on Sep-
tember 25, 1990, at a meeting called by Mr. Hermiller and attended
by three owner representatives — myself, Messrs. Garibaldi and
Warner.

Since I had only recently become ARCO’s representative on the
TAPS Owners Committee, this was the first time I had met my two
colleagues here, as well as Jim Hermiller, Pat Wellington, and
others in the Alyeska organization.

At the meeting, the Alyeska management described the reason
for the investigation and the activities that were conducted.

After hearing the Alyeska presentation, I concluded that the in-
vestigation should be terminated. My view was consistent with the
views of the other two owner representatives present, and was
agreed to by the Alyeska management.

Although I understood the need to protect against theft of propri-
etary and confidential company information, and fully support
measures to put an end to such theft, the Wackenhut investigation
relied upon an investigative approach that, however legal and how-

207

ever widely practiced, was inconsistent with the standards I consid-
er to be appropriate.

In short, I believed the investigation should be stopped.

Alyeska was also instructed to assemble and preserve all investi-
gative materials.

In addition, arrangements were made to bring the entire matter
to the attention of a regularly scheduled full Owners Committee at
an executive session on October 3, 1990.

At that meeting, the Owners Committee agreed with the actions
taken at the September 25 meeting and also endorsed the engage-
ment of special independent counsel to review the Wackenhut in-
vestigation. To that end, the owners subsequently retained Leonard
S. Janofsky of Paul, Hastings, Janofsky & Walker.

In light of the following steps taken by the TAPS Owners, I be-
lieve the owners acted promptly and responsibly by:

One, immediately terminating the investigation;

Two, engaging special independent counsel to ascertain the facts
underlying the investigation, identify any legal issues raised by the
investigation, and generally review the investigation;

Three, determining whether the results of the investigation re-
quired notification to any public official or other person, or the
taking of some other further action;

Four, arranging for the collection of all material resulting from
the investigation and safekeeping with Paul, Hastings, Janofsky &
Walker to ensure that no material would be destroyed or used in
any fashion; and

Five, delegating to Mr. Warner and me the responsibility to
review with Mr. Hermiller issues that surfaced regarding the man-
agement communications process to ensure against future activi-
ties that might be unacceptable for Alyeska to take.

On a broader issue, I would like to express the hope that these
proceedings do not undercut the seriousness of unauthorized disclo-
sures of confidential and privileged information.

Mr. Hermiller was legitimately concerned with the unauthorized
disclosure of Alyeska proprietary documents, and particularly of
attorney-client privilege material.

The investigation disclosed that one person had in his possession
over 20 privileged documents that had been prepared by Alyeska’s
lawyers in connection with the defense of Alyeska in over 100 law-
suits stemming from the Exxon Valdez oil spill.

No organization, in my view, can operate without procedures to
ensure that its privileged and proprietary information will remain
privileged and proprietary.

Before closing, I would like to emphasize that Alyeska’s manage-
ment encourages employees to freely express concerns they may
have about workplace safety and environmental compliance. If an
employee believes Alyeska is doing something wrong, something in
violation of the law, we want to know about it.

Finally, Mr. Chairman, Alyeska would welcome a better process
for working on issues related to its operations. If you have concerns

208

about our policies and practices, regardless of how the information
underlying your concerns came to your attention, we invite you to
communicate them directly to us in order to initiate an open dialog
designed to generate constructive solutions.

The current process which promotes distrust and antagonism
serves no one’s best interests. In that sense, I hope something posi-
tive may come out of these proceedings.

Thank you, very much.

[Prepared statement of Mr. Rusnack follows:]

209

October 30, 1991

STATEMENT OF WILLIAM C RUSNACK
PRESIDENT, ARCO TRANSPORTATION COMPANY

before the

HOUSE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
NOVEMBER S, 1991

Mr. Chairman, members of the Committee, good morning. My name
is William C. Rusnack. I am a Senior Vice President of Atlantic Richfeld
Company and have been President of ARCO Transportation Company, a
Division of Atlantic Richfield, since August 22, 1990. I also serve as ARCO's
representative on the Owners Committee of Alyeska Pipeline Service
Company. As of January 23, 1991, I became Chairman of the Owners
Committee.

ARCO first learned of the Wackenhut investigation on September 25,
1990, at a meeting called by Mr. Hermiller and attended by three owner
representatives: myself and Messrs. Garibaldi and Warner. Since I had only
recently become ARCO's representative on the TAPS Owners Committee, this
was the first time I met my two colleagues here, as well as Jim Hermiller, Pat
Wellington, and others in the Alyeska organization.

210

Page 2

At the meeting, Alyeska management described the reason for the
investigation and the activities that were conducted. After bearing the Alyeslca
presentation, I concluded that the investigation should be terminated. My
view was consistent with the views of the two other owner-representatives
present, and was agreed to by Alyeska management Although I understood
the need to protect against theft of proprietary and confidential company
information, and fully support measures to put an end to such theft, the
Wackcnhut investigation relied on an investigative approach that, however
legal and however widely practiced, was inconsistent with standards that I
consider to be appropriate. In short, I believed that the investigation should
be stopped.

Rather than wait for a full meeting of the Owners Committee, the
three representatives present asked Alyeska management to immediately
cease all investigative activities and to close down the investigation in an
expeditious way. Alyeska also was instructed to assemble and preserve all
investigative materials. In addition, arrangements were made to bring the
entire matter to the attention of the full Owners Committee at an executive

session on October 3, 1990.

211

Page 3

At that meeting, the Owners Committee agreed with the actions taken
at the September 25 meeting and also endorsed the engagement of special
independent counsel to review the Wackenhut investigation. To that end, the
Owners subsequently retained Leonard S. Janofsky of Paul, Hastings, Janofsky
& Walker.

In light of the following steps taken by the TAPS Owners, I believe that
the Owners acted promptly and responsibly by:

• Immediately terminating the investigation;

• Engaging special independent counsel to ascertain the facts
underlying the investigation, identify any legal issues raised by
the investigation, and generally review the investigation;

• Determining whether the results of the investigation required
notification to any public official or other person, or the taking
of some other further action;

212

Page 4

• Arranging for collection of all material resulting from the
investigation and safekeeping with Paul, Hastings, Janofskv <fc
Walker to ensure that no material would be destroyed or used
in any fashion; and

• Delegating to Mr. Warner and me the responsibility to review
with Mr. HennDler issues that surfaced regarding the
management communications process to ensure against future
activities that might be unacceptable for Alyeska to undertake.

On a broader issue, I would like to express the hope that these
proceedings do not undercut the seriousness of unauthorized disclosures of
confidential and privileged information. Mr. Hermiller was legitimately
concerned about the unauthorized disclosure of Alyeska proprietary
documents and particularly of attorney-client privileged material. The
investigation disclosed that one person had in his possession over 20 privileged
documents that had been prepared by Alyeska ’s lawyers in connection with the
defense of Alyeska in over 100 lawsuits stemming from the Exxon Valdez oil
spilL No organization, in my view, can operate without procedures to ensure
that its privileged and proprietary information will remain privileged and
proprietary.

213

Page 5

Before closing, I would like to emphasize that Alyeska’s management
encourages employees to freely express concerns they may have about
workplace safety and environmental compliance. If as employee believes
Alyeska is doing something wrong - - something in violation of law - • we want
to know about it.

Finally, Mr. Chairman, Alyeska would welcome a better process for
working on issues related to its operations. If you have concerns about our
policies and practices, regardless of how the information underlying your
concerns came to your attention, we invite you to communicate them directly
to us in order to initiate an open dialogue designed to generate constructive
solutions. The current process, which promotes distrust and antagonism,
serves no one's best interest. In that sense, I hope something positive may
come out of these proceedings.

— JL ~

William C Rusnack
President

ARCO Transportation Company

214

State of California
County of Los Angeles

On October 30, 1991, before me, Linda M. Mencken, the undersigned
Notary Public, personally appeared William G Rusnack, known to me to be
the person whose name is subscribed to the within instrument, and being by
me first duly sworn, acknowledged that he executed it and declared that the
statements therein contained are true and correct

WITNESS my hand and official seaL

215

The Chairman. Thank you very much, Mr. Rusnack, for your
testimony.

Thank you, all of you, for your appearances here today.

The three of you are the Owners Committee? Or is the Owners
Committee all of the participants?

Does it go beyond the three of you?

Mr. Rusnack. Sir, the Owners Committee consists of a represent-
ative from each of the seven owner companies.

The three of us represent the owners of the majority share.

The Chairman. So when you talked in the written statement
about going to the full Owners Committee, that is everybody,
beyond the three of you?

Mr. Rusnack. That is all seven owners. That is correct.

Could we have Mr. Garibaldi and Mr. Warner also make their
statements?

The Chairman. Oh, sure. I am sorry. I thought that you weren't
going to have that.

Mr. Garibaldi. Thank you, Mr. Chairman, Members of the com-
mittee:

I will make a very brief statement. My name is Fred Garibaldi.

During the period of interest to this committee, I was responsible
for the pipeline and marine transportation functions of BP Amer-
ica. I served as the company’s representative on the Owners Com-
mittee of the Trans-Alaskan Pipeline System from 1987 until Janu-
ary of 1991.

I was the chairman of that committee from early 1989 until Jan-
uary 1991.

I have been asked by this committee to address my knowledge of
the investigation conducted by the Wackenhut Company into the
unauthorized disclosure of confidential documents and information
of Alyeska Pipeline Service Company and the decision to terminate
that investigation.

In my ongoing contacts with Jim Hermiller, president of
Alyeska, I believe I was advised twice that he had some tapes of
Charles Hamel that he thought I ought to see at some time. These
comments were not prolonged and did not cover either the nature
of those tapes or how they were obtained.

Then in mid-September of 1990, I was contacted by Jim propos-
ing a meeting of the ARCO, Exxon, and BP members of the Owners
Committee for the purpose of showing some tapes of Charles
Hamel and discussing a matter of importance to Alyeska and the
Owner Companies.

I agreed, and the meeting took place in Denver on September 25,
1990. I was present, along with Jim Hermiller and other Alyeska
representatives, as well as the representatives from ARCO and
Exxon.

At the meeting, I and the other Owner Company representatives
present were informed that in early 1990, Alyeska had engaged the
Wackenhut Company to investigate unauthorized disclosures to
third parties of internal Alyeska information and documents.

Alyeska advised us at that time that they had elected not to
notify the owners previous to this in order to safeguard the investi-
gation’s confidentiality by limiting the number of people knowl-
edgeable of these activities.

216

My recollection of the events that followed are consistent with
those you just heard from Mr. Rusnack and I will not go over that
again, if this is satisfactory to the committee.

As a final matter, I think it is important to remember the pur-
pose of the investigation was to safeguard proprietary information.
I believe Alyeska not only has a right, but an obligation to protect
its proprietary and confidential information.

There had been clear evidence that such information was being
improperly disseminated. In my view, it was not only proper but
necessary for Alyeska to take corrective action.

However, I did not agree with the methods employed. Based
upon my 30-plus years of experience with Standard Oil and now
BP, this is not the way we do business.

I hope this background is helpful, and I will try to respond to
further questions you may have.

[Prepared statement of Mr. Garibaldi follows:]

217

STATEMENT OF FRED Q. GARIBALDI BEFORE
THE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
NOVEMBER 5. 1991

Mr. Chairman, Members of the Committee, good morning. My name is Fred
Garibaldi. Since 1959, I have been employed in various capacities by The
Standard Oil Company, and then its successor BP America, when BP
acquired the minority shareholding of Standard Oil in 1987. During the
period of interest to this Committee, I was responsible for the pipeline
and marine transportation functions of BP America. I served as the
company's representative on the Owners Committee of the Trans-Alaska
Pipeline System (TAPS) from 1987 until January 1991. I was the
Chairman of that Committee from early 1989 until January. 1991.
Currently, my responsibilities with BP relate principally to emergency
preparedness and response.

I have been asked by this Committee to address my knowledge of the
investigation conducted by The Wackenhut Corporation into the
unauthorized disclosure of confidential documents and information of
Alyeska Pipeline Service Company (Alyeska) and the decision to terminate
that investigation.

In my ongoing contacts with Jim Hermiller, President of Alyeska, I believe
I was advised twice that he had some tapes of Charles Hamel that he
thought I ought to see at some time. These comments were not prolonged
and did not cover either the nature of those tapes or how they were

218

obtained. Then, in mid-September of 1990, I was contacted by Jim
proposing a meeting of the ARCO, Exxon, and BP members of the Owners
Committee for the purpose of showing some tapes of Charles Hamei and
discussing a matter of importance to Alyeska and the owner companies. I
agreed, and the meeting took place in Denver on September 25, 1990. I
was present along with Jim Hermiller and other Alyeska representatives,
as well as representatives of ARCO and Exxon.

At that meeting, I and the other owner representatives present were
informed that in early 1990, Alyeska had engaged The Wackenhut
Corporation to investigate unauthorized disclosures to third parties of
internal Alyeska information and documents. Alyeska advised us at that
time that they had elected not to notify the owners previous to this in
order to safeguard the investigation's confidentiality by limiting the
number of people knowledgeable of the activities. The investigation was
described and portions of videotapes of conversations with Charles Hamel
were shown. After I and the other owner representatives learned of the
nature of the investigation, Alyeska was directed to immediately shut it
down, assemble and preserve the information gathered during the course
of the investigation and make no use whatsoever of the information.

On October 3, 1990, the investigation was described at an executive
session of all members of the Owners Committee and they were advised of
the decisions reached at the September 25 meeting. The remaining

members concurred with the action taken on September 25 and ail

members agreed that an independent law firm should be engaged to satisfy

itself as to the facts underlying the investigation and to advise the
Owners Committee of its findings and of further actions, if any, that
should be taken by the owners.

Following the work by this independent firm, (Paul, Hastings, Janofsky &
Walker), I was satisfied that the only additional action required to bring
the matter to an end was to collect all the information gathered in the
investigation and to retain it in a confidential manner in the offices of
that firm. This was done.

Finally, I think it is important to remember the purpose of the
investigation was to safeguard proprietary information. I believe Alyeska
not only has a right out an obligation to protect its proprietary and
confidential information. There had been clear evidence that such
information was being improperly disseminated. In my view, it was not
only proper but necessary for Alyeska to take corrective action. However,
I did not agree with the methods employed. Based upon my 30 plus years
of experience with Standard Oil, now BP, this is not the way we do
business.

I hope this background is helpful. I will try to respond to any further
questions you may have.

220

District of Columbia, ss. :

The undersigned, a notary public in and for the District of Columbia,
does hereby certify that Fred G. Garibaldi personally appeared before me in
said District, the said Fred G. Garibaldi being personally well known to me
as the person who executed the foregoing document and, being by me first
duly sworn, declared that the statements therein contained are true and
correct.

Given under my hand and seal this 3i«t , day of October,

1991.

Expires

April 1. 1993

221

The Chairman. Thank you.

Mr. Warner.

Mr. Warner. Mr. Chairman, Mr. Young, Members of the com-
mittee:

Good morning. I am Darrell Warner.

The Chairman. Let me just say, before you begin, to the Mem-
bers of the committee that it is my intention to complete Mr. War-
ner’s testimony, which I believe is rather short, and then we will
go vote, and then we will come back for questions.

Thank you.

Mr. Warner. My name is Darrell Warner. I am president of
Exxon Pipeline Company, one of the seven owners of the Trans-
Alaska Pipeline System.

On approximately September 15, 1990, Jim Hermiller telephoned
me to say that he wanted to show some tapes of Charles Hamel to
the three major owners of the Alyeska Owners — to the three major
Alyeska Owners at a meeting he was calling for September 25 in
Denver.

I first learned that Wackenhut was conducting an investigation
for Alyeska at the September 25 meeting. At that meeting, Mr.
Hermiller, Mr. Wellington, and two Alyeska attorneys generally
described the investigation to the Owner Company representatives
who were present.

They said that Alyeska had begun the investigation because of
the theft of confidential company documents, including at least one
attorney-client privileged document regarding the Exxon Valdez oil
spill.

Mr. Wellington told us that he had retained The Wackenhut
Company to conduct the investigation; that his explicit instructions
to Wackenhut were to use only established, legal means.

He told us that Wackenhut began the investigation in March
1990, and he described in general terms what had been done.

The owners asked questions to fill in details, and there was a dis-
cussion about legal actions that Alyeska might bring to recover the
stolen documents. We were shown about 45 minutes of some of the
videotapes of dialog with Mr. Hamel.

While we were told that what was done was legal, I did not think
that the investigation was an acceptable course of action for
Alyeska to pursue.

The owners expressed concern about continuing the investigation
and, together with the Alyeska personnel present, decided that it
should be immediately terminated.

The owners also directed Alyeska to avoid using the investigation
materials for any purpose, including the taking of action against
Alyeska employees, and to assemble and preserve all relevant data.

There was general agreement on all of these points.

In executive session at the next regularly scheduled TAPS
Owners meeting on October 3, the matter was reviewed with the
full Owners Committee. A decision was made to retain an outside
law firm to conduct a detailed review of the investigation.

Subsequently, Mr. Leonard Janofsky of the law firm of Paul,
Hastings, Janofsky and Walker, was retained for this purpose, and
Alyeska was instructed to transmit all related materials to him.

222

Following Mr. Janofsky’s review, in January 1991 several deci-
sions were made by the Owner Companies and Alyeska. All of the
material resulting from the investigation was to be sequestered in
the offices of Paul, Hastings.

No dissemination of the information which had been gathered
was to be made, and the information was not to be used for any
purpose.

In addition, Mr. Rusnack and I reviewed with Mr. Hermiller the
Owners Committee’s conclusions regarding communications neces-
sary to ensure against future unacceptable activities.

In my written statement for the record, I also refuted certain al-
legations of Exxon participation in the investigation. In the inter-
ests of your time, I won’t repeat that now.

I hope that my statement — this statement has addressed your
questions, and I, as these other gentlemen, will attempt to answer
any additional questions that you may have.

Thank you.

[Prepared statement of Mr. Warner follows:]

223

TESTIMONY OF DARRELL G. WARNER
PRESIDENT, EXXON PIPELINE COMPANY
BEFORE THE HOUSE COMMITTEE
ON INTERIOR AND INSULAR AFFAIRS
NOVEMBER 5, 1991

Mr. Chairman, members of the Committee, good morning. My name is
Darrell Warner, and I am the President of Exxon Pipeline
Company. Exxon Pipeline Company is one of the seven owners of
the Trans-Alaska Pipeline System and of Alyeska Pipeline Service
Company. Alyeska, as you know, operates the pipeline on behalf
of the owner companies. I have been on the TAPS Owners Committee
since 1986.

You have asked me to address my knowledge of facts surrounding
the Wackenhut investigation and the decision to terminate the
investigation .

On approximately September 15, 1990, Jim Hermiller telephoned me
to say that he wanted to show some tapes of Charles Hamel to the
three major Alyeska owners at a meeting he was calling for
September 25, 1990 in Denver.

I first learned that Wackenhut was conducting an investigation
for Alyeska at the September 25, 1990 meeting. At that meeting,
Jim Hermiller, Pat Wellington and two Alyeska attorneys generally
described the investigation to the owner company representatives
who were present. They said that Alyeska had begun the
investigation because of the theft of confidential company
documents, including at least one attorney- client privileged
document regarding the EXXON VALDEZ oil spill. The theft of
legal materials was considered by Alyeska to be more serious than
the ongoing leaks of Alyeska documents which had been occurring
over a number of years and which concerned mainly technical or
operational information.

Mr. Wellington told us that he had retained the Wackenhut
Corporation to conduct the investigation, and that his explicit
instructions to Wackenhut were to use only established legal

224

Page 2

means. He told us that Wackenhut began the investigation in
March 1990, and he described in general terms what had been
done. The owners asked questions to fill in details, and there
was a discussion about legal actions that Alyeska might bring to
recover the stolen documents. We were shown about 45 minutes of
some of the video tapes of dialogue with Mr. Hamel.

While we were told that what was done was legal, I did not think
that the investigation was an acceptable course of action for
Alyeska to pursue. The owners expressed concern about continuing
the investigation and, together with the Alyeska personnel
present, decided that it should be immediately terminated. The
owners also directed Alyeska to avoid using the investigation
materials for any purpose including the taking of action against
Alyeska employees, and to assemble and preserve all relevant
data. There was general agreement on all these points.

In executive session at the next regularly scheduled TAPS owners
meeting, on October 3, 1990, the matter was reviewed with the
full Owners Committee. A decision was made to retain an outside
law firm to conduct a detailed review of the investigation.
Subsequently, Mr. Leonard Janofsky of the law firm of Paul,
Hastings, Janofsky and Walker ( M PHJW" ) was retained for this
purpose, and Alyeska was instructed to transmit all related
materials to him. Following Mr. Janofsky' s review, in January
1991, several decisions were made by the owner companies and
Alyeska: all of the material resulting from the investigation was
to be sequestered in the offices of PHJW? no dissemination of the
information which had been gathered was to be made; and the
information was not to be used for any purpose. In addition,
Mr. Rusnack and I reviewed with Mr. Hermiller the Owners
Committee ' s conclusions regarding communication necessary to
ensure against future unacceptable activities.

It is important that I add one item for the record. I have seen
affidavits of former Wackenhut employees filed several weeks ago

225

Page 3

by counsel for Mr. Charles Hamel in a lawsuit with Exxon
currently pending in federal court in Houston. This lawsuit
concerns the interpretation of oil and gas lease contracts signed
in 1977 by Mr. Hamel and his partners. The lawsuit has
absolutely no relation to the matter before your Committee
today. The affidavits, however, state repeatedly that the
authors had been told that Exxon had early knowledge of the
Wackenhut Investigation; this is absolutely false. No one
working in Exxon Corporation or any of its subsidiaries
authorized or participated in this investigation, or ever used
any aspect of it for any purpose. The only Exxon person who knew
of the investigation before late September 1990 was Steve
Dietrich, an Exxon employee seconded to Alyeska on long-term
assignment as Administrative Vice President, and in this role he
knew that an investigation was beginning at about the time he
left Alyeska. No Exxon lawyer or any other Exxon employee ever
went to Coral Gables to review the investigation material as was
reported in the press. I might also mention that I understand
that the federal judge in the Houston contract case has recently
ruled that the Wackenhut investigation has no relevance to the
lawsuit.

I hope that in this statement I have addressed your questions. I
will attempt to answer any additional inquiries you may have.

Darrell G. Warner, President
Exxon Pipeline Company

226

Page 4

THE STATE OF TEXAS )(

)(

COUNTY OF HARRIS )(

Before me, a notary public, on this day personally
appeared Darrell G. Warner, known to me to be the person whose
name is subscribed to the foregoing document and, being by me
first duly sworn, declared that the statements therein contained
are true and correct.

Given under my hand and seal of office this 31st day of
October, 1991.

CHARLES RAYMOND LftMAY

Notary Public. Stato of Tom
My ConuMsm Expuo* 02/01/92

CHARLES RAYMOND LeMAY
Notary Public Typed Name

( seal )

227

The Chairman. Thank you, very much.

The committee will recess for a few minutes to go vote. We will
be right back.

[After recess.]

The Chairman. The committee will reconvene.

Let me again thank you for your appearance and for your testi-
mony, gentlemen.

Mr. Garibaldi, it seems to appear from the record, for the
moment, as it is developed over time here that some changes oc-
curred with respect to actions by Alyeska after the Scottish Eye
program.

Are you familiar with the Scottish Eye program?

Mr. Garibaldi. Yes, sir, I am.

The Chairman. And I think it is fair to characterize the testimo-
ny that that heightened concern and awareness — I think that is
kind of the middle between the two testimonies — about documents
being leaked.

What was your communication with Mr. Hermiller after the
Scottish Eye program? Did you talk to him about that program?

Mr. Garibaldi. Yes, sir, I did.

There were two separate issues that came out of that program.
One, it was aired in England, and it had been sharply critical of BP
as having double standards. So there was a concern of the content
of the program that we discussed.

A second concern was the fact that a document which was clear-
ly a privileged and confidential attorney-client document had been
actually shown on that program.

The Chairman. So how were those concerns discussed?

Mr. Garibaldi. The second concern — in my view, there had been
a number of discussions previous to that.

There had been ongoing discussions periodically on the dissemi-
nation of — improper dissemination of Alyeska confidential material
and its availability to the public.

There had been ongoing discussions. This was a further, and very
clear evidence. There it was.

So as I saw that, that was a — it was more evolutionary than rev-
olutionary in the sense that we were already aware that informa-
tion was being improperly disseminated.

The Chairman. Were those discussions about previous availabil-
ity of documents to the public, were those centered on the question
of the documents being available? Or were those centered on Mr.
Hamel?

Mr. Garibaldi. It was just a general concern that the normal
documents that you need to run your business are not being — are
not properly protected.

The Chairman. Was Mr. Hamel discussed in those previous dis-
cussions?

Mr. Garibaldi. I don’t specifically recall that he was, but I’m
confident that he probably was, because clearly he was one of the
users of those documents.

The Chairman. In the previous discussions about the unauthor-
ized availability, were remedies discussed? Did you discuss what
you might or might not do within the company in terms of internal
security, or the flow of information and/or documents?

228

Mr. Garibaldi. No specific remedies that I recall.

The Chairman. So you were what, in those previous discussions?
You were just sort of lamenting that this was happening?

Mr. Garibaldi. Yes, and with I think an understanding that
there would be — in the normal course of events, you would take a
look at your security systems and see where you thought they
were — you know, just a general concern that something probably
ought to be done about it.

The Chairman. What did you direct Mr. Hermiller to do as a
result of the Scottish Eye program?

Mr. Garibaldi. I didn’t direct Mr. Hermiller to do anything as a
result of that.

The Chairman. So the next contact you had on this subject
would be, what, when he called you, and I guess he called — did he
call all three of you — saying he had some tapes of Charles Hamel
that he wanted to show you? Would that be the next contact?

Mr. Garibaldi. Could I expand just a bit on my last statement?

The Chairman. Yes.

Mr. Garibaldi. I don’t recall any specific conversation with Jim
Hermiller saying, do something about — it could well have hap-
pened in the context of our conversations that he advised me that
he was going to take some specific steps to try to stop the leaks of
information. And had he done that, I’m sure I would have respond-
ed, “Good. Do it.”

The Chairman. Did you

Mr. Garibaldi. But I don’t recall specifically that conversation.

The Chairman. Did you send Mr. Hermiller a letter with a series
of questions after the Scottish Eye program?

Mr. Garibaldi. I don’t recall if it was a letter. I do know that
there

The Chairman. Or a fax, or some communication?

Mr. Garibaldi. Some specific questions that came up, and I think
I elicited Jim’s help in responding to those.

The Chairman. Can you tell us what those questions were?

Mr. Garibaldi. I don’t recall. I don’t have that document. One
question I do recall had to do with the standards for ballast water
quality, and there were some related issues. I recall something
about the use of tugs, perhaps. They were those kinds of issues. I
don’t recall them, specifically.

The Chairman. Well, I would like to formally request that docu-
ment. We had requested all documents relating to this, and I be-
lieve that clearly that document does so. So we would ask formally
that you produce that document to the committee, if you will.

Your counsel can discuss that with committee counsel, however,
but I would like to make that a formal request.

Mr. Jordan. We will pursue that with your counsel, Mr. Chair-
man.

The Chairman. Thank you.

So then we are at the point where Mr. Hermiller calls you and
says that he has some tapes. He has Charles Hamel on tape that
he thinks you ought to see. And he called you also, Mr. Rusnack?
Is that correct?

Mr. Rusnack. Yes, he did call me. I don’t remember in the phone
conversation that he mentioned to me specifically tapes. He simply

229

said that they had a security problem — he and I had never met —
and they wanted to have a special meeting in Denver, and would I
be available.

The Chairman. The same is true with you, Mr. Warner?

Mr. Warner. To me, he did say that he had some tapes of Mr.
Hamel that he wanted to show.

The Chairman. And what actions did the three of you take at
that point? Did you simply go to the Denver meeting? Or did you
ask your attorneys? Did you talk among yourselves about the
Denver meeting with respect to this matter?

Mr. Rusnack. I subsequently found out, if my recollection is cor-
rect, that Fred Smith, who was then counsel for Alyeska, had
called my ARCO attorney and invited him to the same meeting.

The Chairman. That would be?

Mr. Rusnack. Mr. Bilgore. Mr. Bilgore and I then talked about
it. Mr. Bilgore really didn’t get much more information in his con-
versation with Mr. Smith than I did in my conversation with Mr.
Hermiller, but we both agreed that we ought to be there.

The Chairman. Mr. Warner, you brought your attorney, also?

Mr. Warner. Yes, I had — I’m not sure if it was at the same dis-
cussion on September 15, or if there was an intervening phone call,
but at some point Mr. Hermiller said that the tapes had something
on them relative to Exxon shipping matters that he would want to
talk with me privately about, and this I think put up a red flag
that I probably needed to bring my attorney, so I elected then to do
so.

The Chairman. When did you talk privately to him about that?

Mr. Warner. Pardon me?

The Chairman. When did you talk to him privately about the
Exxon shipping matters?

Mr. Warner. At the end of the meeting on September 25 — 25,
whatever, the meeting in Denver. I asked Mr. Hermiller if he had
any specifics further, and he said, no, those things had come up in
the meeting.

The Chairman. And “those things” were what?

Mr. Warner. There were allegations that Mr. Hamel made
about transfer of ballast water and things like that.

The Chairman. Specifically with respect to Exxon?

Mr. Warner. Sir?

The Chairman. Specifically with respect to Exxon?

Mr. Warner. Right. Absolutely. Yes.

The Chairman. Those were raised in the meeting — in the gener-
al meeting?

Mr. Warner. Mr. Hermiller told me that the things that were
pertinent to Exxon were raised in the general meeting.

The Chairman. So there was no further discussion at that time?

Mr. Warner. No further discussion.

The Chairman. And that was with respect to the transfer of bal-
last water? Is that correct?

Mr. Warner. Yes, sir.

The Chairman. Ballast water at the terminal, or at sea, or both?

Mr. Warner. I believe that it had to do with transfer of ballast
water at sea, from one vessel to the other, and it may not have

230

been that specific in the tapes, but it was that general — in what I
saw, but it was that general allegation.

The Chairman. What did you do in response to that allegation?

Mr. Warner. I did nothing in response to hearing the allegation
there until the last — until the material was made available to the
committee.

The Chairman. At the meeting, this was in Denver and you were
the three representatives of the owners? Is that correct?

Mr. Warner. That is correct.

The Chairman. And Mr. Hermiller was accompanied by?

Mr. Rusnack. As I recall, he was accompanied by Mr. Smith,
Lon Trotter — who is another attorney with Alyeska — and Mr. Wel-
lington.

The Chairman. Mr. Wellington. And how did the meeting pro-
ceed?

Mr. Rusnack. My recollection

The Chairman. This was your first meeting, right, Mr. Rusnack?

Mr. Rusnack. That is correct.

The Chairman. Are you going to go back for a second one?
[Laughter.]

Mr. Rusnack. With a lot more interest. [Laughter.]

There was a presentation made, I think an introduction either by
Hermiller or Smith, but a basic presentation was then made by Mr.
Wellington which described some details of an overview of the in-
vestigation, the purpose of the investigation. And then they told us
they had segments of tapes which they would like us to look at.

I believe they had about an hour’s worth of tapes which they in-
tended to show us. They began showing the tapes, and at some
point as we went through the tapes, somewhere between half an
hour and 45 minutes, the three owners somewhat kind of looked at
each other and acknowledged that we had seen enough; we did not
need to see the full tapes that they intended to show us, because
we were ready to talk.

We then, I believe since Mr. Garibaldi was the chair at the time,
he spoke first and basically expressed immediately that in view of
what he had heard and what he had saw, that it brought some con-
cern to his mind, and that his view was that we should shut down
the investigation immediately.

Mr. Warner and I readily agreed to that, and we proceeded then
with a plan to shut it down. We immediately decided that, in view
of our concern about the approach taken in the investigation, that
we did not want to have any of this information used for any pur-
pose, and we instructed the management of Alyeska not only to
discontinue the investigation, but to make sure that the material
was immediately gathered up, secured, and used by no one for any
purpose, and that this was something that needed to be brought to
the immediate attention of the four minority owners.

We had a regularly scheduled owners meeting for October 3. We
decided, rather than to call a meeting in between September 25
and October 3, that we would have an early executive session at
which this would be the presentation in that executive session on
October 3.

231

We did that. And the reason we felt we did not need to do any-
thing ahead of time is that we clearly told them to stop and gather
up the material.

So we felt very secure in our position at that point.

The Chairman. Mr. Garibaldi, what is it that you heard and saw
that led you to then say that you had seen enough and that you
wanted this investigation stopped?

What was it that you heard from Mr. Hermiller and the others
that were making the presentation to you?

Mr. Garibaldi. It was nothing specific, other than the nature of
the investigation itself. The investigation of a third party in that
fashion just simply was, in my view, inconsistent with the way we
conduct our business, and we should shut it down.

The Chairman. When you viewed the tapes, what is it you heard
on the tapes? We don’t know. We are not able to determine what
snippets, as they were presented, you heard in that 45 minutes.

Can you remember what you saw, or what

Mr. Garibaldi. I can’t. I think the purpose in showing the tapes
was to demonstrate that in fact Charles Hamel had private
Alyeska documents in his possession, and to demonstrate that on
the tapes.

It was not specifically the information on the tapes that was the
focus of my thinking in shutting it down. It was the fact that they
had been made.

The Chairman. This did not look to you like something you
wanted to put your logo on?

Mr. Garibaldi. Exactly.

The Chairman. Mr. Rusnack, this is your first meeting.

Mr. Rusnack. Yes, sir.

The Chairman. When you saw the tapes, again I assume there
may be some exceptions, but essentially Mr. Hamel is the center of
this. In a number of tapes he makes claims about pollution dis-
charges in one form or another, and illegal actions, whatever his
assertions on those tapes, and I think also reciting that he is the
recipient of material, of documents. Did they fall out of the sky?

Again, I do not know what you saw, but what were you thinking
at that time?

Mr. Rusnack. Well, I don’t recall what I saw in detail, either,
other than that one of the tapes that we saw I recall specifically
was I guess what I would call the first tape they made. It was made
I think in a hotel room, rather than the office that they had set up.

What I remember about that tape is it was virtually unaudible.
You couldn’t hear it. You couldn’t make out what he was really
saying. My hearing was not, in that meeting, capable of really un-
derstanding exactly what was being said for that portion of the
tape.

There was some explanation either by Mr. Smith or by Mr. Wel-
lington about what was really going on there, but I couldn’t under-
stand it.

Then there was another tape that was done in a setting where
you could understand it, and you’re right. There were just ram-
blings about environmental matters.

I think you mentioned in the discussions yesterday, why was
there a discussion about — why did your name come up. I think in

232

one of the tapes Mr. Hamel mentioned your name, and we saw
that. So we as owners questioned that and wanted to know what
was the nature of this, what was going on.

I have a phrase I use in certain instances in business when you
are faced with situations that are pretty straightforward to deal
with. My phrase is that it was a blinding glimpse of the obvious as
to what ought to be done, and it ought to be shut down; that it was
not something that I thought was appropriate, or that Alyeska or
anyone should be involved in.

The Chairman. Mr. Rusnack, Mr. Bilgore accompanied you. Yes-
terday I read from the Paul, Hastings memo which apparently was
done after an interview with Mr. Bilgore. The Paul, Hastings
memo notes that Mr. Bilgore notes that, throughout the meeting,
Alyeska felt that it had done well and was proud of its investiga-
tory work.

“They hyped up the tapes as containing information that would
expose Hamel and Petrich” — and that is Mr. Petrich to my left
here — “as forming a conspiracy with gross motives.”

Is Mr. Bilgore accurately reflecting?

Mr. Rusnack. I did not get the impression of what I will call
“hyped up.” The remarks were made on the tape, and we pursued
a discussion because the owners were interested in what that
meant.

My impression was — and I got different impressions depending
upon the individual Alyeska management person there — but my
general impression was that there was not a great deal of enthusi-

asm for continuing, or for the results of the investigation.

My impression was that the members of the legal staff of
Alyeska had some enthusiasm for pursuing litigation against Mr.
Hamel because of his possession of the documents, but I did not get
that same impression from the remarks that Mr. Hermiller made.

He did not seem to share that same enthusiasm necessarily for
pursuing any litigation. He was what I would describe as somewhat
neutral at that point in looking for direction from the owner.

The Chairman. Was there in fact a discussion, hyped up or oth-
erwise, about exposing Mr. Hamel and Mr. Petrich to forming a
“conspiracy of gross motives”?

Mr. Rusnack. I don’t know what that means.

The Chairman. I don’t know, either. I must have missed school
that day.

Mr. Rusnack. There was a discussion about, because the owners
were concerned, there was a discussion about the relationship. The
owners obviously wanted to know — we wanted to make sure that
they didn’t do anything beyond the discussions or taping with Mr.
Hamel, that they did not pursue any avenue that might be directed
at any Member of Congress, whether it was a staff member or
yourself, and we were assured in that meeting that there were no
efforts to go beyond the discussions that took place between Mr.
Black and Mr. Hamel in that taping session; that that was the
extent of it.

The Chairman. Was that discussion before or after viewing the
tapes?

Mr. Rusnack. It was after viewing the tapes.

The Chairman. It was after viewing the tapes?

233

Mr. Rusnack. Yes. It came up because of the comments by Mr.
Hamel on the tape.

The Chairman. Was there a discussion — I believe this is from
Ms. Pace’s notes — “to neutralize Hamel, we might make contact
with Miller, EPA, etc.”?

Mr. Rusnack. One of the things the owners went through was,
you know, a quick — although we wanted to shut it down, and we
did immediately decide to shut it down, and we subsequently — I
mean, we pretty shortly decided not to use the material, our first
impression was, well, what do we do with this material?

We can’t — it is there. Do we have any obligations to do anything?

One of our concerns was that if Mr. Hamel made some comments
concerning a Member of Congress, did we in our role as owners
have an obligation in any fashion to do anything?

A natural extension of that is, whether we have an obligation or
not, is it in our best interests to go to Mr. Miller and let him know
what was going on?

We had a discussion that anyone would have of such a thing.

We quickly concluded that, because of the sensitive nature of all
this material, the best thing we felt that could be done was to shut
down the investigation and make sure this material was not used
for any purpose.

And then, to seek advice from independent legal counsel as to
how we should proceed from there forward.

The Chairman. And that was the decision to get the Paul, Hast-
ings firm? Correct?

Mr. Rusnack. Subsequently, then, we retained Janofsky.

The Chairman. And the purpose of that was to have them inter-
view the participants at the various levels, and to write you, what,
a memorandum as to rights and obligations and liabilities, what
have you? Right?

Mr. Rusnack. The purpose was:

To review the entirety of the investigation;

To report back to us;

Since the assertion had been made by Alyeska that nothing ille-
gal had been done, to review that, let the owners know of the legal
status of all of the investigation and what obligations or legal com-
plications that it might present to the Owner Companies;

A recommendation as to what should be done with the material;

Do we have an obligation to bring it to anyone’s attention, such
as yourself?

And what the ultimate disposition should be.

And as we have already stated, the recommendation was that we
did not have any obligations. There were not any obvious illegal-
ities committed.

There were exposures, one of which you talked about yesterday,
but that there was no obligation on our part, and the recommenda-
tion was to gather all the material and make sure that it was not
misused by anyone for any purpose.

The Chairman. Let me just ask two additional questions.

At that same meeting, if I can reconstruct the record properly,
there was also the question of litigation, was there not, because you
are the circuit breakers, more or less, on whether or not to go for-
ward with lawsuits?

234

That is not an independent decision that is made by Mr. Her-
miller or others?

Is that correct?

Mr. Rusnack. That is correct.

The Chairman. So I would characterize this in a sense, from
reading the record, that they brought you the body of evidence
saying that they wanted to go forth; that they thought they had
met the burden of proof between the tapes and other activities en-
gaged in in surveillance; what did you think?

This was a decision where you could tell them “yes,” “no,” “let
us look into it,” “let us do” — you have all kinds of options. But you
are the circuit breaker in those decisions.

Mr. Rusnack. That is correct.

The Chairman. This group of three and/or the entire group if it
is even more serious than that.

Mr. Rusnack. The entire group, yes.

The Chairman. But theoretically you are in a position — you are
the agents for the rest of the representatives?

Mr. Rusnack. No. They would have to be involved.

The Chairman. They would have to be involved in that final de-
cision?

Mr. Rusnack. That is correct.

The Chairman. I see. OK, but that is essentially what was taking
place here. Mr. Hermiller, Mr. Wellington, and others had arrived
at a point that they were now ready to go and deliver this materi-
al; a prosecution memo was started. As far as we know for the
moment, it was not done, but the memo was to go to the FBI, or to
go to some other States attorney or somebody and move forward.

That is what this presentation was about?

Mr. Rusnack. Well, as I have described to you, I did not sense
that that was a unanimous feeling on the part of the entire man-
agement team of Alyeska that presented to us that day; that it
seemed to be of interest to the people in the Legal Department of
Alyeska, but that Mr. Hermiller did not join in a strong endorse-
ment of that, and was looking for direction from the Owners Com-
mittee.

And, quite frankly, in that September 25 session, the question of
litigation did not get actively discussed. Because once the owners
made the decision not to use the material for any purpose, that in-
cluded litigation, we gave up the option.

In a sense, once we made that decision, the option of pursuing
any purpose, including litigation, was eliminated. That was obvious
to the management of Alyeska, so they did not pursue discussion of
that.

The Chairman. Finally, let me just say that I think in your
three statements you present rather correctly the problem that we
are confronted from, and this committee may be confronted from
another side, and that is: we should not let this hearing suggest
that any Member of this committee or the Congress takes lightly
the unauthorized release of people’s work product.

We would not want it to happen, and we try to guard against it
happening in our offices, in our campaigns, our official business, or
what have you.

235

This has obviously been an ongoing concern with respect to
Alyeska. A number of documents have been put into regulatory
agencies' hands, Congress’ hands in both Houses, and what have
you. Yet at the same time it is rather interesting that you all sort
of arrived at the same conclusion, according to your testimony, and
that is essentially that this is not the way we do business, or this is
not the way we collectively should do business.

As I said, this is not something that you wanted to put your logo
on in sponsoring this kind of activity. That presents the rub. At the
same time, when we start to receive information that sources to
this committee may be under that kind of investigation, and we are
in the middle of an ongoing relationship with Alyeska by the juris-
diction of this committee and by our involvement, we are also look-
ing to see who is putting that stamp of approval on those activities.

Obviously, as I think Mr. Hermiller testified, this became some-
thing that he could not control and would not do it again, and it
appears that you arrived at that conclusion once you saw the work
product.

That does not relieve the tension and the desire to have security
within the normal course of business, be it attorney-client or not.
That is really not the issue.

The issue is security from your point of view.

Thank you, very much.

I want to say to my colleagues, I took a little bit more time, but I
thought it was an opportunity to lay out sort of the sequential
events that took place.

Mr. Young, we will recognize you.

Mr. Young. Mr. Chairman, I had a short statement to make, but
you just made it for me, and I will yield back the balance of my
time.

The Chairman. Two for one here. You guys are way ahead.
[Laughter.]

Mr. Richardson.

Mr. Richardson. Could each of you tell me the date that each
one of you learned about the investigation? Maybe first with Mr.
Rusnack. This was at the meeting?

Mr. Rusnack. The first I learned about the investigation was
September 25 of 1990 at the meeting in Denver.

Mr. Richardson. Mr. Warner.

Mr. Warner. The first I learned was September 25. After going
through the meeting on September 25, 1 felt that I could not under-
stand why we hadn’t been involved, and I went through a data
search in my brain, if you will, and tried to remember if there was
anything that I had ever heard that could have tipped me off or
have told me that this was underway.

After thinking about it for a couple of days, I recalled a conver-
sation that I might have had with Steve Dietrich who early on was
an Alyeska officer, and Steve asked me, I think he asked me if I
had ever heard about a security investigation that — an Alyeska se-
curity investigation of the leaks, and I told him that I hadn’t, and
that was the end of the conversation.

I don’t convey that to mean that I knew.

Mr. Richardson. Well, is it correct that a Ron Olson of Exxon
knew?

236

Mr. Warner. No, there is no Ron Olson with Exxon that I know.

Mr. Richardson. There is no Ron Olson?

Mr. Warner. Well, Exxon has a lot of employees. I don’t know.

Mr. Jordan. Mr. Richardson, Ron Olson is an attorney with the
law firm of Munger, Tolies & Olson, and is employed on the Exxon
Valdez litigation matters.

Mr. Richardson. When was he told of the investigation?

Mr. Rusnack. Subsequent to September 25, but I couldn’t give
you an exact date. He was informed because of the concerns relat-
ed to the Exxon Valdez litigation, and he was simply informed of
the existence of this situation with no details.

Mr. Richardson. Now, Mr. Garibaldi, when were you informed
of the investigation?

Mr. Garibaldi. As I said earlier, I may have had a conversation
early in 1990 about leaks and the fact that Alyeska was going to
take some steps to try to correct those leaks.

The first time I heard of the nature of the investigation that had
taken place was September 25.

Mr. Richardson. Now would you not — why would you not inform
the other owners when you first heard of the investigation?

Mr. Garibaldi. I think securing Alyeska’s or maintaining Alyes-
ka’s information in a secure status is simply an ongoing part of
Alyeska’s management responsibilities.

Mr. Richardson. I mean, it occurs to me, gentlemen, that
Alyeska is making a significant sting operation. I guess the issue
here is, is it correct that your companies own Alyeska?

Is that correct?

Mr. Rusnack. The companies represented here today own 90 per-
cent of Alyeska, approximately.

Mr. Richardson. OK. Now the Owners Committee, would you
not feel that Alyeska perhaps did not follow proper procedures by
informing you sooner of this major activity?

Did it strike you as inconsistent with their procedures or your
corporate procedures?

Mr. Rusnack. Congressman Richardson, in my statement I men-
tioned that Mr. Warner and I did have a session after we became
aware of that, and subsequent to the Janofsky investigation of the
investigation and the report that they gave us, to give Mr. Her-
miller some feedback and expression of the concerns of the owners.

I would not describe it in terms of Alyeska, but I think in retro-
spect — and I am sure Mr. Hermiller agrees with this — that you can
tell from his testimony yesterday, that he made an incorrect man-
agement judgment, a bad management judgment.

He understands that he did that, and he will never do it again.

Mr. Richardson. So you continue to stand behind Mr. Her-
miller?

Mr. Rusnack. Yes, sir. Mr. Hermiller is responsible for the oper-
ational aspects of Alyeska Pipeline Service Company. Mr. Her-
miller is a highly competent operating executive. In his almost 2-
year tenure as president of Alyeska, he has demonstrated signifi-
cant leadership.

He has done a lot of things to improve Alyeska. He has spear-
headed a major effort to reorganize the company, and it has result-

237

ed in really a revitalized management that is capable of taking re-
sponsibility, taking accountability, and solving problems.

He has created new environmental and quality assurance divi-
sions in Alyeska. He is a good decisionmaker on operating matters,
and he accepts accountability.

He communicates well with his organization, and his organiza-
tion works well and has good teamwork. We think that Mr. Her-
miller in his role of operating Alyeska is an excellent manager who
made one very serious mistake in judgment.

Mr. Richardson. Now did Pat Wellington, or anyone at Alyeska,
communicate about the information gathered in the sting with any
of your security people, or any other employee during the course of
the investigation?

Mr. Rusnack. Could you repeat that, sir?

Mr. Richardson. Yes. Did Pat Wellington, or anyone at Alyeska,
communicate about the information gathered in the sting with any
of your security people, or any other employee of your organiza-
tions during the course of the investigation?

Mr. Rusnack. As far as I am aware, as a result of my own
knowledge and the knowledge gathered by the Paul, Hastings in-
vestigation, he made no contact with any members of the manage-
ment or security of my company during the course of this investi-
gation.

Mr. Warner. In the case of Exxon, we went a step further when
this matter came out — became a public matter. We asked our secu-
rity people if they had heard anything, and they advised us they
hadn’t.

Mr. Richardson. The same with BP?

Mr. Garibaldi. That’s correct. We did not take the steps that
Exxon took. I know of no contacts that have been made.

Mr. Richardson. Now let’s go to the September 25th meeting.

Did Alyeska want the covert operation to continue?

Mr. Rusnack. My impression was that they were not making
what I will call a pitch to continue the covert investigation.

On the other hand, they did not come in and recommend that it
be stopped. They came looking for direction from the Owner Com-
panies, and they were prepared, however, I believe, to continue the
investigation if the Owner Companies agreed.

Mr. Warner. Could I add to that, sir?

Mr. Richardson. Yes.

Mr. Warner. My recollection is that Alyeska — that a meeting
was set up between Mr. Black and Mr. Hamel for perhaps the fol-
lowing day, and we told them not to go through with that meeting,
to shut it down.

Mr. Richardson. Why was the investigation terminated?

Mr. Rusnack. I will repeat what I said earlier. From my stand-
point, it was a blinding glimpse of the obvious. There was absolute-
ly no merits, in my view, to continuing the investigation.

I did not like the approach that had been pursued in this, and I
just came to an immediate conclusion that it needed to be stopped.

Mr. Richardson. Now was anyone concerned that Hamel was a
source for the Exxon Valdez investigation being conducted by this
committee?

Mr. Rusnack. On the part of what?

238

Mr. Richardson. On the part of the Owners Committee.

Mr. Rusnack. I cannot speak for the Owners Committee in that
regard because that was my first meeting. Personally, up to that
meeting I had never even heard of Charles Hamel. So I just did not
know anything about him.

I met him on tape the first time that day.

Mr. Richardson. Has any information gained in the investiga-
tion been used to identify sources or punish whistleblowers within
your corporations?

Mr. Rusnack. To the best of my knowledge, no.

Mr. Warner. In my case, when this became a public matter I did
advise the president of Exxon Shipping Company of certain of the
allegations against Exxon Shipping Company.

Mr. Garibaldi. To my knowledge, it was the directive that we
provided that they were not to use this information for any pur-
pose. To my knowledge, that has been followed.

Mr. Richardson. What about the shipping company? Have they
used this information?

Mr. Warner. I don’t know what they have done with the infor-
mation I gave them.

Mr. Richardson. Mr. Rusnack, do you know?

Mr. Rusnack. When you say “information,” I gave no informa-
tion to anyone.

The one, I will say, allegation that I became aware of as a result
of the tapes, I simply checked into our own marine company about
the allegation without referencing the source of the allegation.

Mr. Richardson. I have one final question.

Mr. Hamel makes a number of very serious environmental alle-
gations in the surveillance tapes. You are aware of that?

Mr. Rusnack. I have not seen all of the surveillance tapes, but I
am aware of the general knowledge of his allegations.

Mr. Richardson. I am not going to detail every environmental
allegation at this time. I would just like to know whether each one
of you have evaluated his charges, and whether you have taken
any corrective measures as recommended in the Paul, Hastings law
firm briefs recommendations to you?

Mr. Rusnack. Sir, as I mentioned, I am aware of one allegation
with regard to ballast water. Once again, I believe the nature of
the allegation that I became aware of specifically with regard to
my company was something to the effect of loading toxic material
on to our tankers after they off-load crude in Long Beach, and
taking that toxic material as part of the ballast water to Alaska.

I talked to, and we have an environmental audit group which
just happened to be doing an environmental audit of our marine at
the time. I utilized that audit to direct information to find out
about that. I came away with an understanding and a confirmation
that ARCO runs what I would classify as a “closed system” with
regard to marine matters; that the only materials that are in
ARCO’s ships in Alaskan service are only ballast-water related to
Alaskan crude oil delivery, and no substance of any kind is intro-
duced into it outside of the closed Alaskan system.

Mr. Richardson. Let me just conclude by saying that it appears,
gentlemen, and I think especially you, Mr. Rusnack, that you acted

239

properly at the September 25 meeting, basically shutting this effort
down.

My concern is the issue of corporate oversight and responsibility.
How could something of this magnitude, a sting-wide operation of
this magnitude nationwide that possibly involved a Member of the
Congress, that you would not have procedures to be aware of it, to
oversee it.

That is what is a little bit disturbing. But clearly, and especially
you, Mr. Rusnack, you were on the job shortly and it seems that
you were the main cog in getting this shut down. I have to ac-
knowledge that you acted properly.

That still does not excuse the lack of oversight.

Mr. Rusnack. Sir, I would make two comments.

No. 1, I was not the “main cog.” We had three main cogs. There
was no dissent among the owners. All of the owners were as enthu-
siastic about shutting this down as I was. It was not only a blinding
glimpse of the obvious to me, but it was to Exxon and BP also.

No. 2, 1 think that we have the procedures in place. This is not a
failure in procedures. This is a management judgment, a bad deci-
sion made by an executive in Alyeska, and he has been given broad
and adequate feedback to ensure that this will never happen again.

Mr. Richardson. Well, Mr. Rusnack, then I have to regrettably
disagree with you, because it is inconceivable to me how, besides
the error in judgment, that you and your Owners Committee, the
three major corporations, would not have information for oversight
interest capacity, accountability, in the procedures that led to this
investigation and subsequent investigative techniques used.

I do not see how you can justify correct procedures. You are basi-
cally saying that you give your employees latitude to just do about
anything. What that “anything” was here was a highly — it seems —
a highly questionable effort.

Now I have said good things about you, and then I have to re-
spectfully disagree with the last statement.

Mr. Rusnack. I understand, sir. But you have to understand, Mr.
Hermiller was working on the right problem. He had every right to
pursue shutting down the leaks and stealing of our documents, par-
ticularly those documents that are related to protecting your own
rights in litigation of a matter.

Mr. Richardson. We are not questioning the rights to plug leaks
and corporate piracy. I am questioning the methodology, the oper-
ations, the potential illegalities and that you would not have an
oversight mechanism to ensure that something like that would not
happen.

I am not questioning the right to plug leaks in a responsible
manner, an in-house manner. Perhaps you would have said: Get
your own people to do it. Hire an outside legal counsel.

Mr. Rusnack. I think in fact if you look really at the timeframe
involved here, that the time between when particularly the taping
begem — because my understanding is that the first taping did not
begin until May 1990, and then there was no taping, if I remember
the record, at all between May and August. And then there were a
series of tapes done in August — that it was really a relatively short
time, after this thing really got going, that the owners got in there
and immediately stopped it and shut it down.

240

This did not go on for some extended period of time, over years
and years. This was a very short duration operation.

We certainly agree that we would have wanted Mr. Hermiller —
and he will in the future — to bring to the attention of the owners
any matters such as this before he contemplates it. We would have
preferred that he brought it to our attention shortly after he con-
templated it, at least, and I think we have the procedures in place
to make sure that that will happen in the future.

Mr. Richardson. That is good.

Thank you, Mr. Chairman.

The Chairman. Mr. Marlenee.

Mr. Marlenee. Mr. Chairman, I reserve my time and yield to
the gentleman from North Carolina.

Mr. Taylor. Let me direct this to all of you, or any one of you
who cares to answer.

On your last page, Mr. Garibaldi, you believe that Alyeska has
not only an obligation but a right to protect its property and confi-
dential information.

The information that you saw was missing, it included clearly at-
torney-client privileged information. You had seen that broadcast
on television.

Did you feel that there were other things missing, such as trade
information, procedures manuals, things that were actually corpo-
rate assets and part of how you do business, the development of
which is valuable and it is a solid asset of the corporation?

Mr. Garibaldi. Congressman, I am not sure I had any idea of ex-
actly what information was missing, but there was clear evidence
that there was access to our filing system, or our documents, and it
was the access that had been demonstrated that was of concerned,
because there was obviously a good deal of proprietary and confi-
dential information associated with ongoing litigation, and also em-
ployee files, and what have you.

Mr. Taylor. If corporate assets — and I know intangible assets
have value, and the courts have said they have value— do you
think probably with the multitude of things missing — it was sever-
al thousand dollars it would have cost to replace, or that type of
information — it was an exposure?

Mr. Garibaldi. I do not know if I could put a price tag on it. It
would certainly have value, and also having some of that informa-
tion out just simply creates a threat to the organization.

Mr. Taylor. From a sabotage standpoint.

Mr. Hermiller testified, I believe — and if not he, one of the previ-
ous witnesses who was involved — testified — that there were some
engineering plans and procedural manuals and other things that
had been missing that would have specifically, if they had fallen
into the wrong hands, could be used for sabotage, or certainly to
enhance sabotage.

Is that a concern of your corporation?

Mr. Garibaldi. Certainly it is.

I am not sure that the focus was on any specific information that
was out there, so much as it was recognition that our security
system had — others had access to secure information.

Mr. Taylor. Well of course the Alyeska security representative,
as well as Mr. Hermiller, yesterday both were concerned about it.

241

I just wondered if they had expressed that concern in this meet-
ing with the Board in September.

Did they express that to you?

Mr. Garibaldi. That has been an ongoing issue for some time;
yes, sir.

Mr. Taylor. And your pipeline provides about 25 percent of the
Nation’s oil.

Mr. Garibaldi. Yes, sir.

Mr. Taylor. If something happened to that — could that line be
shut down through well-placed explosives, sabotage? If you had
enough information, could you shut that line down for an extended
period of time?

Mr. Garibaldi. I am sure that you could, sir.

Mr. Rusnack. Yes, sir.

I would like to comment, because it was shortly after this period
that we got into Desert Storm.

To just demonstrate the vulnerability, we had significant securi-
ty threats, bomb threats that were made to our facilities during
that period of time.

Particularly we had specific threats made to attach bombs to
ships that were in port, and to blow up ships that were in port; to
not only shut down the line, but to create another environmental
disaster in Alaska, and went so far as to employ an unmanned sub-
marine to examine the bottom of ships during that time period
before they could load crude.

Mr. Taylor. And so if you have these threats being made — of
course you are always at risk for sabotage.

Environmental disasters could be had on land, or in the water,
by properly placing explosives or doing other things that might be
acts of sabotage.

You have both the legal and the moral responsibility to the
stockholders and to the people of this Nation who you furnish 25
percent of the oil to see that that does not happen in every way
possible?

Mr. Rusnack. Yes, sir.

Mr. Taylor. And you take that responsibility seriously, I pre-
sume?

Mr. Rusnack. Yes, sir.

Mr. Taylor. So Alyeska, as you have said, had every right to
move ahead and try to stop the leaks, or to try to find out what
information was missing and to try to recover that information, if
they could, and try to get back or stop any damage that might be
done from the leaks, or the stolen documents.

Mr. Rusnack. That is correct, sir.

Because although we had identified certainly one recipient of the
material, we did not know what types of people or characters were
receiving our material and for what purpose it might be used.

Mr. Taylor. Course, I will tell you today that, had you failed to
exercise that responsibility, or had Alyeska failed to do it, and a
sabotage occurred, especially during the Desert Storm period, this
committee would have you here today and probably half of the
other committees in Congress would have your hide for that fail-
ure.

So you have, I think, clearly the right to move ahead.

242

Now, Mr. Chairman, I would like to ask these gentlemen: In the
course of the tapes, and so forth, there was a cassette, Excerpt #5,
dated August 30, where it is purported that Mister — could you pass
those out, if we have not already?

The Chairman. I would ask a committee inquiry of the gentle-
man.

This is a photocopy of the original?

Mr. Taylor. May we enter the tape, then, into the record?

The Chairman. Let me finish the inquiry.

This is not a document that we have received in connection with
this hearing.

Is that correct?

Mr. Taylor. The transcript is — there is a date and summary of
the context, which I am not relying on — the transcript of Mr.
Hamel. It is my understanding it is an exact transcript from the
tape.

I have of course — I am so far down the seniority level on this
committee, I knew I was not going to get to see all of the informa-
tion necessarily, and there are tons of boxes of it out there, and it
is hard for me to tell if these are the exact words on the tape, but I
am relying on them being.

The Chairman. The Chair is not going to allow this document to
be used, or to be distributed.

If the gentleman wants to cite the context, he is able to do that
from the original document, or he can play enough of the tape for
the purposes of setting the context, but we have had the same
problem on our side and I think we should stick to the transcripts.

Mr. Taylor. Would you allow the tape to be made a part of the
record?

The Chairman. Would the gentleman identify, for the Chair,
what th© tap© is?

Mr. Taylor. It is Exhibit 30 F2R411029, which purports to be the
information from the written text.

The Chairman. That is fine.

You can play the — this is the tape that was supplied to us under
the subpoena request.

Is that correct?

[Discussion off the record.]

The Chairman. The committee is going to take a 1-minute recess
here.

[After recess.]

The Chairman. The committee will reconvene.

Just for information, we will proceed with questions. Mr. Taylor
had some questions that were related to the transcripts that were
provided for us, and we will get to those at a time when we have
the original transcripts and/or audios that were provided by
Alyeska to the committee.

I do not want to get into the recreation of evidence for the pur-
poses of the official record, so that may take a moment.

But, Mr. Taylor, you are free to go ahead and proceed with ques-
tions not related to the earlier discussed documents.

Mr. Taylor. Thank you, Mr. Chairman.

Gentlemen, you testified I think a moment ago that you heard
excerpts from the tapes?

243

Mr. Rusnack. That is correct.

Mr. Taylor. Did those excerpts deal with the fact that Members
of this committee, or staff from this committee may have been par-
ticipating, or encouraging the flow of documents from your compa-
ny to them?

Mr. Rusnack. Sir, the tapes were not specific in talking about
“encouragement” or “participation.” The tapes that I recall were
simply that Congressman Miller was a person who was mentioned
by Mr. Hamel in one of the segments, as was his staff member, Mr.
Petrich.

But I do not recall the context or the exact words that were used.

Mr. Taylor. I want to clarify for the record, Mr. Chairman, the
fact that we had, and yesterday some information that was of
course put in the record, the fact that we have someone who was
taped saying that he was directing, and encouraging, and doing
things, does not necessarily mean that that is happening.

It means that you have someone saying that it is happening.

That of course can be of concern.

Did you draw the conclusion that perhaps there was a closer re-
lationship between Mr. Hamel who was being taped and this com-
mittee through his conversation that might give you pause?

Mr. Rusnack. I simply drew a conclusion that Mr. Hamel was
stating a relationship of some nature with Congressman Miller
and/or his staff person.

Certainly that gave the owners pause. That created a concern on
our part as to whether the investigation itself in any fashion went
beyond looking for where Mr. Hamel got the documents and how
we could stop the documents from leaving our possession.

Mr. Taylor. Why were you concerned about going the traditional
routes of calling the local authorities? Did you feel they were inad-
equate? Or, given the nature of the information being disclosed,
you were concerned? Or what was your

Mr. Rusnack. I can speak for myself.

First of all, you have to understand we were not involved at all
at that point.

Mr. Taylor. Yes.

Mr. Rusnack. On September 25, we did not know exactly what
we had.

We saw 30 to 45 minutes of tape, and we had an overview from
the management of Alyeska.

I guess one of the thoughts that ran through my mind — and I re-
member commenting to Mr. Bilgore who was with me — was basi-
cally I said to him, this scares the hell out of me. I don’t know
what we have here.

The subsequent result of that was that we decided to retain an
independent counsel to find out what we had.

Mr. Taylor. What scared you about it? What is “this”?

Mr. Rusnack. I do not particularly like videotaping. I do not like
going through people’s garbage.

I was particularly concerned when a Member of Congress name
surfaced in the tape.

Mr. Taylor. That concerned you from the standpoint that you
were perhaps finding, or listening to privileged conversations

244

maybe with a Member of Congress, or a Member of this committee,
or this committee officially?

Or the fact that a Member of this committee might be encourag-
ing stolen documents to be placed in this committee’s possession?

Mr. Rusnack. Just the fact that his name surfaced. I wanted to
know what it is we had. I just felt extremely uncomfortable.

Mr. Warner. In my case, sir, I would have come to the same con-
clusion if Congressman Miller or Mr. Petrich had not been men-
tioned at all.

It just was not an appropriate thing for Alyeska to be doing.

Mr. Taylor. Does anyone else want to comment?

Mr. Garibaldi. I would say the same thing.

I think our focus, certainly mine, was, having found out the way
it was done, to shut it down and not use the information.

Then, any discussion, further discussion of what that information
was, was a bit blurred in the context that we had already decided
not to use it.

The Congressman’s name was a concern that we have some obli-
gation — there’s something here — an obligation that we have, as a
result of some things that have taken place.

Mr. Taylor. Mr. Chairman, gentlemen, I want to tell you in clos-
ing that my opinion — and I may come back with questions after we
make the decisions on the tapes a little later — but I do not want
my privacy, or anyone in this Nation’s privacy invaded unnecessar-
ily, trash gone through, and being taped, whether it is illegally or
legally.

I recognize that it is a part of legitimate investigations if it is ap-
proved by the courts from a law enforcement standpoint.

It also may be legal in some States, as we know, where one party
consents.

It is not a pretty process.

It is not a process that we like to see, and I understand your con-
cern about it.

I also recognize that your corporation has a right and a legal
duty to try to reclaim the property, to try to protect what is a very
essential part of this Nation’s lifeline for its energy.

The catastrophic results from a disruption of 25 percent of our
oil here would be devastating all across the country, at any time of
the year, and at certain other times of the year even more so for
certain of the population.

So you have that right and that legal responsibility. If you have
violated the rights of anyone in the process through your contrac-
tors, the detective agencies, or any of your employees, there are
channels open to those people who were violated both criminally
and civilly to proceed against you, and in fact they may have al-
ready started doing that.

The public can be protected that way. I have been concerned all
along that the thrust of this committee has been one-sided toward
trying to be concerned about the people who might have been in-
vestigated, their rights, and quite properly so.

But those people have an abundance of civil and legal channels
that they can follow.

245

The fact that you drew back when you heard Congress was in-
volved gives you some idea of the power of a congressional commit-
tee.

Congress is perceived in the public, quite rightly so in many
cases, to have insulated itself from all of the protections that you
have against other people.

You would not have those same protections against Members of
Congress.

Now it is absurd that that should be so, but it is so in many
cases. We have exempted ourselves from a large portion of the laws
that we enact.

I do not think that we have exempted ourselves from the crimi-
nal and the civil and the professionally ethical regulations in the
conduct that has been alleged by some of the testimony here.

I do not think we have done that, but I can see where the public
could certainly perceive that we had, and that we ourselves may
set ourselves above the law, and have the right to do things that
we are criticizing your agency for doing.

It concerns me that we do not — and I hope we will in this com-
mittee — focus our attention toward what may have happened here
that went beyond the bounds that this congressional committee
should ever go beyond in obtaining evidence, or obtaining informa-
tion that may be attorney-client privileged, which is certainly un-
ethical from any professional standpoint, obtaining stolen docu-
ments, if we knew those documents were stolen, and utilizing that
information, because it not only is illegal, immoral, bad ethical
practice, it also jeopardizes the public’s right perhaps to proceed
against the wrong-doer in the future.

If we take stolen documents and produce those stolen documents
in the future, it could jeopardize any criminal action that might be
taken down the road.

So that type of clumsiness could actually do far more public
harm than it could ever do good.

I hope our committee will focus some on that, either during this
process or perhaps at another time.

Thank you.

The Chairman. Mr. Johnston.

Mr. Johnston. Thank you, Mr. Chairman.

First I would like to make somewhat of an unfriendly observa-
tion.

Gentlemen, we started out yesterday with Mr. Lund who is an
independent contractor hired by Wackenhut who looks in a spy
magazine and gets telephone records.

Wackenhut does not know what Lund is doing.

Alyeska does not know what Wackenhut is doing.

And you three gentlemen at the table there, representing 90 per-
cent of Alyeska, do not know what Alyeska is doing. The day you
closed it down was the day you had knowledge of it.

It seems to me that everybody is building a firewall for responsi-
bility, knowledge, and insulating themselves from everyone else in
this process.

Mr. Rusnack, at page 2 of your testimony you stated on Septem-
ber 25, in short:

246

“I believe that the investigation should be stopped, categorical-
ly.” Did you feel that Alyeska or Wackenhut was violating any
laws?

Mr. Rusnack. Sir, on September 25 — I am not a lawyer — so on
September 25, I had no concept of a factual basis to make that
judgment.

I was told by the management of Alyeska and their attorneys, as
you have heard in the last couple of days, that they very, very judi-
ciously gave direction that all investigations should be conducted in
a legal manner, only legal practices used, and we were told by the
management that that had been done, and there had been no viola-
tions of the law.

I had no reason to believe that that was not true.

Mr. Johnston. Mr. Warner.

Mr. Rusnack. But as I said, I was uncomfortable.

Mr. Warner. That is precisely my understanding on September
25.

Mr. Johnston. Mr. Garibaldi.

Mr. Garibaldi. That is correct, sir.

Mr. Johnston. Mr. Taylor just said, and you agreed, Mr. Rus-
nack, that you had a moral — and I repeat “a moral” — and legal
right, and responsibility, to stop leaks.

But, you stopped.

Mr. Rusnack. Excuse me? Stopped what?

Mr. Johnston. You stopped the investigation that would in turn
stop the leaks.

Mr. Rusnack. We have not stopped our effort to stop the leaks,
sir.

We are continuing our efforts to stop leaks, and we will continue
that, on and on.

But we have stopped the practice that was being used as part of
this investigation to stop those leaks.

Mr. Johnston. Have you hired other investigators to stop them?

Mr. Rusnack. No, sir.

Mr. Johnston. Mr. Taylor also stated that if privacy rights have
been violated — and I guess he was referring to Mr. Hamel — that
they have judicial recourse to do that.

Do you not have the same judicial recourse, to sue Mr. Hamel?

Mr. Rusnack. Yes, we do.

Mr. Johnston. Have you exercised that?

Mr. Rusnack. Sir, as I mentioned to you, the decision process we
went through was, No. 1, a decision whether or not to continue this
investigation that we have heard about.

We decided to discontinue that.

So the second decision is: What do we do with the material? How
do we use the material that has been collected to date?

We decided at that meeting that we should use that material for
no purpose, because we had no idea what was there, what was the
scope of it, and once we made that decision to use that material for
no purpose, we in effect made the decision to not pursue litigation
against Mr. Hamel, as desirable and as right as we might be in
that.

247

We retained a law firm, Paul, Hastings, Janofsky to advise us as
to the disposition of that material, and to do an investigation of
what had been done.

Our attorneys came back to us and, on balance, recommended
that we do not use the material because of the ramblings and the
statements that are made there with regard to a variety of people
on the tapes who had no involvement in this investigation and
could be damaging to individuals out there.

So we decided not to use the information for any purpose because
it could be misused, and we did not want this material misused in
any fashion.

Mr. Johnston. You know, Mr. Hamel is receiving material
today, probably, and yet you still did not go to court and stop him
from receiving it?

Mr. Rusnack. We still have that right, sir.

Mr. Johnston. Mr. Taylor also talked about attorney-client viola-
tions of information that has been leaked to Mr. Hamel.

The same thing happened when Wackenhut went into Mr.
Hamel’s garbage and trash.

Is that not correct?

Mr. Rusnack. Would you please repeat that?

Mr. Johnston. Mr. Taylor was very interested in the fact that
information leaked to Mr. Hamel violated the attorney-client rela-
tionship.

I am just saying, conversely, when Wackenhut, your agent once
removed, went into Mr. Hamel’s garbage and trash, they extricated
things out of that that were communications with Trustees for
Alaska that violated attorney-client relationships.

Mr. Rusnack. I do not want to put myself in the position, be-
cause of what I have already stated, of trying to defend anything
that was done in this investigation.

But I must tell you that I believe, as Mr. Richey stated, once
trash is put out, that is in effect giving up attorney-client privilege,
anyway.

That is different than stealing something from within a compa-
ny’s office, from its use in defending itself for instance in a lawsuit.
That is not a defense. It is simply a statement of what I heard from
legal counsel.

Mr. Johnston. In your statement, Mr. Warner, you refer to
Alyeska’s having begun an investigation because of the theft of
documents, confidential documents.

Mr. Garibaldi, you do not use the word “confidential.” Mr. Rus-
nack, you use “confidential” and “proprietary.”

Mr. Rusnack. That is correct.

Mr. Johnston. What is your definition of “proprietary”?

Mr. Rusnack. “Proprietary” is material that is of a nature that
is important to the successful conduct of one’s business, particular-
ly in a competitive nature.

If my firm has a chemical formula for a product that gives us a
competitive advantage in the marketplace, that is proprietary in-
formation to my firm.

If another competitive firm were to have access to that informa-
tion so as to be able to use the technology that I had which was
trying to give me a competitive advantage, that would be inappro-

248

priate for one of my employees, or a nonemployee to steal, leak, or
provide that material to a competitor.

And, it is illegal.

Mr. Johnston. Let me see if this encompasses the word “proprie-
tary.” A leak to Mr. Hamel of a violation of environmental laws,
would that be proprietary information?

Mr. Rusnack. When you say — if that information, for instance,
were between an attorney of my firm — if my firm is defending
itself against a lawsuit and the allegation of the violation of law is
made as part of the lawsuit, and there is a discussions between my
attorney in putting together the defense that I have in that law-
suit, and that is stolen and given to somebody else, that is a viola-
tion of law.

Mr. Warner. Let me try your question.

Mr. Johnston. Let me continue with Mr. Rusnack.

Mr. Rusnack. You have to give me specifics, sir.

Mr. Johnston. I will get more specific than you.

Let us say it is not involved in a lawsuit. Here is a leak of a
gross violation of environmental law.

Would that come under your umbrella of proprietary informa-
tion?

Mr. Taylor. Would the gentleman yield?

Mr. Warner. Let me try that, sir.

Mr. Johnston. No.

Mr. Rusnack.

Mr. Rusnack. When you say “a leak of a gross violation,” of
what nature? Is this factual material? Is this hearsay material?
What is it?

Mr. Johnston. It is being leaked by your employees, so I would
assume it is factual material.

The hypothetical is that your employee leaks information on
dumping ballast in the Gulf Stream that has foreign material in it,
that is deleterious to the environment. There is no lawsuit in-
volved.

Is that “proprietary” information?

Mr. Rusnack. In the sense of proprietary to the firm, it is.

If that employee has knowledge and facts that my firm would be
doing something such as that and they were to take it to the
proper authorities and reveal it, that is not a violation.

That is appropriate.

Mr. Johnston. You were going to answer, Mr. Warner.

Mr. Warner. I was wanting to say that, from my point of view,
that a whistleblower can certainly tell about things. Telling about
things and taking masses of documents may be two different
things, because the documents, many times, are not necessary to
make the allegation.

Mr. Johnston. Mr. Taylor, I will yield now.

Mr. Taylor. I was going to mention, these would be alleged vio-
lations.

I think it is quite possible — because an item is leaked does not
necessarily give it validity or credibility. It may be a figment of
someone’s imagination.

249

Mr. Johnston. Under the law, Mr. Warner, if you become knowl-
edgeable of a violation of an environmental law, a criminal law, by
your own company, are you obligated to disclose that violation?

Mr. Warner. I am not a lawyer. I do not know. I suspect I am,
and 1 would.

Mr. Johnston. At the meeting of September 25, when you looked
at the tapes, did you discover or become knowledgeable of any vio-
lation of law by Exxon?

Mr. Warner. No, sir, I did not.

I became familiar with some allegations that Mr. Hamel had
made.

Now I personally have told Mr. Hamel, and I have told others,
that if they have factual knowledge about violations of law, they
ought to take those directly to the proper authorities.

I have also been familiar with, many times in the past, that Mr.
Hamel has alleged violations. They generally are not specific.

They are general many times, and he often goes to the agencies.

They often — almost always — have never proven to be factual
business.

The ones I heard on September 25 I had heard before, for the
most part.

Mr. Johnston. Be specific.

What did you hear on September the 25 that was an allegation of
a violation of law by Exxon.

Mr. Warner. I heard nothing that was an allegation of a viola-
tion of law by Exxon — I beg your pardon, sir.

I heard a comment having to do with some nefarious act off Cali-
fornia.

It was not specific enough for me to determine that it was a vio-
lation of law.

Mr. Johnston. Mr. Pace was your attorney?

Mr. Warner. Yes, sir.

Mr. Johnston. I have a copy of his notes here, sir. He states in
here:

“The Florida Keyes. Exxon sold two vessels that were dumping
offshore and pumping out their ballast.” Do you recall that conver-
sation?

Mr. Warner. No, sir, I do not.

Mr. Johnston. You do not?

Mr. Warner. Ms. Pace can clarify; she tells me

The Chairman. One second, if I might.

This was handed out yesterday, as a matter of the record.

Mr. Johnston. Do we have an exhibit number? 85.3 or some-
thing, so Mr. Taylor could find it?

But you do not recall that, specifically?

Mr. Warner. No, sir, I do not.

Mr. Johnston. In your earlier testimony, you stated, when Mr.
Richardson asked you about the transfer of ballast off of Florida,
you said, “I did nothing until the information was transmitted to
me.”

Then when it was transmitted to you, what was your next step?

Mr. Warner. I provided a copy of the allegation, the general al-
legation, to Mr. Gus Elmer who is the president of Exxon Shipping
Company.

250

Mr. Johnston. Do you know if they did anything?

Mr. Warner. It is something like plus or minus 3 days from Sep-
tember 6.

Mr. Johnston. What did they do? My question was, did Exxon
Shipping Company do anything about an allegation of the violation
of an environmental law?

Mr. Warner. I do not know, sir.

Mr. Johnston. You do not?

Mr. Warner. I do not.

Mr. Johnston. You do not feel it was your responsibility to
follow up?

Mr. Warner. I am Exxon Pipeline Company.

I have no direct relationship with Exxon Shipping Company, but
I know Mr. Elmer and I am sure he would have taken appropriate
action.

Mr. Johnston. You do not have the slightest idea what that
action was?

Mr. Warner. I have none, no, sir.

Mr. Johnston. Mr. Garibaldi, in questioning by Mr. Taylor about
the leaks — and we elaborated on some of them being sabotage
leaks, and things of that nature — you specifically stated that you
did not know the knowledge of the leaks, or the specificity of what
was actually leaked by the employees of Alyeska?

Mr. Garibaldi. As a general matter, that is true. Obviously the
one document we are all familiar with — and there may be others —

but as a general matter, I did not know the nature of the docu-
ment.

Mr. Johnston. Mr. Rusnack, do you know the specific documents
that were leaked?

Mr. Rusnack. No, sir.

Mr. Johnston. So you do not know if they had to do with nation-
al security, Operation Desert Shield, anything of that nature?

Mr. Rusnack. I know, for instance, it has been stated that there
were engineering drawings of a facility.

I know that there were attorney-client privileged documents re-
lating to the defense of litigation. That is the extent of my total
knowledge.

Mr. Johnston. How about you, Mr. Warner?

Mr. Warner. That is the same as mine.

Mr. Johnston. So you all really do not know if it had to do with
sabotage, all of these leaks? Do you confirm what Mr. Hermiller
said, that all of these leaks came from inside employees of Alyeska,
or contract employees?

Mr. Warner. I cannot verify that.

I do not know, sir.

Mr. Johnston. That is all I have, Mr. Chairman.

The Chairman. Mr. Rhodes.

Mr. Rhodes. I would like to take you back to the September 25
meeting and your reaction when you heard Chairman Miller’s
name mentioned on one of the tapes that you saw.

Is that correct?

Mr. Warner. Yes, sir.

Mr. Rusnack. Yes.

251

Mr. Rhodes. Let’s see if I can elicit from you a little bit more of
your response, your mental and your verbal response, when you
heard Mr. Miller’s name mentioned by Mr. Hamel on the tapes
and realized that those tapes came into existence as a result of an
investigation commissioned by Alyeska.

Is it fair to say that your response was one of both surprise and
shock at hearing Hamel referring to Congressman Miller on a tape
that came about because of this investigation?

Mr. Warner. I would have to say, sir, that anything Mr. Hamel
says would not surprise me.

He makes a lot of claims about a lot of things. But I am not
trying to be terse, but that is the truth. Mr. Hamel talks a lot.

Mr. Rhodes. But earlier when Mr. Taylor was asking you about
the same subject, you said that you were concerned after you re-
viewed the tapes and after you, among other things, heard Mr. Mil-
ler’s name mentioned.

Your reaction, to yourselves, was that you did not know what
you had.

I am trying to pin down a little bit of what, not knowing what
you had, meant to you.

Would your reaction have been something along the lines of, oh,
my God, do you suppose these people have had George Miller
under surveillance?

When you say it was an “expression of concern,” and you did not
know what you had, I am trying to figure out what you meant.

Were you worried?

Mr. Rusnack. I have used the word — I was very concerned.

I was very uneasy, is what I would describe it. We were told very
clearly that the only persons that they did any investigation of in
any sense was Charles Hamel, and they were trying to find the
source of his documents.

Their concern was that somehow in their thought of pursuing
some litigation against Mr. Hamel that it could raise a question of,
was Mr. Hamel an agent of a Congressman, and therefore we could
not appropriately pursue litigation against him in that role.

But they just did not know.

My concern, we were assured in that meeting that there was no
pursuit beyond what Mr. Hamel said on the tapes.

So, based on what they told me, I had no thought that they had
pursued any investigation of a Congressman or a member of his
staff.

When I say I “didn’t know what we had,” we saw 30 to 45 min-
utes of tape, and subsequent — they told us they had hours of tape.

We did not know what were on the other hours of tape, and we
felt very strongly that we needed to know what were on the other
tapes, and the total package of material that they had collected.

So when I say we did not know what we had, that is really what
it refers to.

Mr. Rhodes. Was trying to determine what was in that package
of material, including other tapes, one of the reasons that you re-
tained the Paul law firm, for them to review the materials?

Mr. Rusnack. Yes, sir.

Mr. Rhodes. As a result of that review, were you later satisfied
that in fact Wackenhut and its operatives had not conducted any

252

surveillance on any Member of Congress, or congressional staff, in-
cluding Mr. Miller?

Mr. Rusnack. Yes, sir.

Mr. Rhodes. Was the review specific to that point? Did the Paul
firm review specifically say to you, based upon the material we
have reviewed, we have concluded that there was no surveillance
conducted on any Member of Congress?

Mr. Rusnack. I remember we had an all-day meeting in about
December of 1990 with the Paul, Hastings people to review.

My recollection of that meeting is that that was one of the points
that they addressed, yes.

Mr. Rhodes. Thank you.

I don’t have any other questions.

I thought I was supposed to yield to Mr. Marlenee at this point,
but Mr. Marlenee appears to have yielded to temptation, so I will
yield back the balance of my time. [Laughter.]

The Chairman. Mr. Allard.

Mr. Allard. No questions.

The Chairman. One of the conflicts that is emerging here, and
we will hear about it later, but as you review the tapes, it is diffi-
cult to pick and choose where you decide Mr. Hamel is credible or
not credible.

If you decide he is credible for your purposes, my purposes, your
purposes, Mr. Taylor’s purposes, or somebody else’s purposes, then
is he not credible for other purposes?

As I think anybody who has sat through long sessions of these
tapes realizes, there is almost no end to the issues and discussions
of issues, personalities, experiences, and events that are not cov-
ered here.

And that obviously raises a whole array of concerns when you
try to get down to shall we say the nub of the facts here.

You have been asked several times about whether or not the
mere mention of my name caused you to draw back.

I must also say that the mere mention of my name caused me to
leap forward.

Because, whether or not Members of the committee are fully
aware of it or not, we have in fact numerous ongoing, I will use the
term, relationships — you gentlemen might use something else — but
relationships with the operation of your system.

Again, many of the Members of this committee were not here
when it happened, but that system is by special charter of the Con-
gress of the United States.

We recognized what that system delivers in terms of domestic
energy.

There also is a very specific reservation to the people of the
United States to unilaterally change that charter through the Sec-
retary should a determination be made that the public interest is
not in fact being served.

So this conflict — and it really is a conflict — I think in your own
legal documents where there is a discussion of Alyeska prior to
1983-84, and the reputation, and then the question of the deteriora-
tion of that reputation. And of course the Exxon Valdez which puts
everything back on the burner.

253

There is a discussion there by one of the attorneys that this has
been the most investigated, prodded, poked at, and litigated corpo-
ration in America, with merit and without merit, and that has cre-
ated a tension about this entire system.

You, for better or for worse, are the representatives to that
system on behalf of the companies.

Within that, I think it is also apparent to a number of people
that all of Mr. Hamel's charges have not been without merit.

Mr. Taylor read from the newspaper article yesterday saying
that nothing was done. No further action was taken with respect to
the ballast water. And of course we know that that was an inter-
mediary step.

And, later, a lot of steps have been taken with respect to ballast
water and so forth.

So I would say that one of the concerns we have raised, and for
whatever reasons you pulled back, one of the reasons we came into
this investigation was we were well aware that there were a
number of Members of Congress who could have walked right
through this sting operation.

Mr. Johnston was concerned about whether or not ballast water
and toxic wastes were being dumped off of the Florida Keyes.

We know that issue. Mr. DeFazio, a Member of this committee,
was involved at the same time on the question of what was going
off of the Pacific Coast.

I was involved at the questions of whether dumping was taking
place off of the Pacific Coast.

We were involved in that time in hearings with Mr. Hermiller
and others with respect to the corrosion issue, where again there
were a number of false starts on that issue. Then, finally, there
was the going forward on that issue.

That is the context in which we became aware of information
that we were involved in surveillance involving Mr. Hamel, and to
what extent we did not know at that time. Us.

That is when this committee’s jurisdiction was invoked in this
process.

It is also clear, when we look at the evidence that has been sub-
mitted, that there are other Members of Congress, not members of
this committee, who could have walked right through the screen
here in this discussion of this sting operation.

Because, with all due respect, those who are running the sting
were not terribly sophisticated in all of the issues before the Con-
gress of the United States, and the Alaska transportation system
from the Arctic Circle to Long Beach, and I guess around to the
Caribbean. And it is that entire system.

So I would hope that Members of the committee would under-
stand that it is that context when we are talking about people
going around with body bugs, and phone taps, and RVs full of elec-
tronic gear, that that is the context in which this committee in-
voked its jurisdiction, the purpose for which was to protect that ju-
risdiction and the right of the Congress to engage in those investi-
gations and the ongoing oversight of this committee in the Alaska
Pipeline Act and other issues with respect to Alaska.

I just think that it is important to know that.

254

Furthermore, let me just say that that conflict shows up again in
this very matter.

I refer again to the Paul, Hastings memorandum of this event.

I guess this is not in the record yet.

This is the conference with Mr. Bilgore and Alfred T. Smith. The
file is October 10, Exhibit No. 38. [See page 709.]

Let me interrupt that question and yield to Mr. Marlenee, who
has a conflict. We’ll come back to that.

Mr. Marlenee. Thank you, Mr. Chairman.

Would you describe for me the location of the Point McIntyre
lease?

Mr. Warner. It is just north of Prudhoe Bay.

Mr. Marlenee. Pardon me. I did not hear that.

Mr. Warner. It is just north of Prudhoe Bay, within seeing dis-
tance, within a very few miles of Prudhoe Bay.

Mr. Marlenee. Is it onshore, or offshore? Or part of both.

Mr. Warner. It is very close. I do not know, sir.

Mr. Marlenee. Does anyone have that information?

Mr. Rusnack. I believe it is onshore, sir. None of us are produc-
ing people, so we can’t give you that specifically.

Mr. Marlenee. But it is close to Prudhoe Bay?

Mr. Rusnack. Yes.

Mr. Marlenee. And when you have a lease, what is one of the
first things you do?

Mr. Warner. Certainly the first thing you try to do is try to shut
down the pipeline.

Mr. Marlenee. When you evaluate the lease?

Mr. Warner. Oh, I’m sorry.

Mr. Marlenee. In evaluating the “lease,” what do you do?

Mr. Rusnack. You do a seismic evaluation of the lease to deter-
mine the geology of the lease.

Mr. Marlenee. You do a seismic? Is there any way to tell exact-
ly what is in that lease, or how much production that lease may
yield by seismic activity?

Mr. Rusnack. There is no exact way, sir. Basically you get an
electronic reading which gives you the geology of the area and,
based on expert knowledge of that geology, judgments are made as
to whether there possibly may be hydrocarbons present. But there
is no way to determine definitely whether hydrocarbons are
present or, if present, whether they are of a sufficient quantity to
be economically producible.

Mr. Marlenee. The only way, as I understand, that you can tell
whether there is production there is to drill. Is that not correct?

Mr. Warner. Yes, sir.

Mr. Rusnack. That is right.

Mr. Marlenee. When did ARCO, BP, and Exxon drill the first
exploration well on the lease holding, the McIntyre lease holding?

Mr. Rusnack. I do not know the first well, sir. I do know that
there was a discovery well that was drilled which was the third
well, Point McIntyre, No. 3, that was drilled in early 1988 which
was spudded March 12, 1988.

Mr. Marlenee. It was spudded on March 12, 1988?

Mr. Rusnack. That is correct.

Mr. Marlenee. There were three previous wells?

255

Mr. Rusnack. There were previous wells found not to have eco-
nomic — or any hydrocarbons at all, basically “dry holes” as we call
them in the industry.

Mr. Marlenee. Thank you, Mr. Chairman. I have no further
questions.

The Chairman. I thank the gentleman.

Go to the memo that I earlier referred to, Mr. Rusnack, on the
bottom of page 5.

Mr. Rusnack. Is that the full paragraph at the bottom of page 5?

The Chairman. Go down to the sentence, I think it is the second-
to-the-last sentence, that begins “The memoranda themselves were
shown on television programs. In addition, Alyeska personnel feel
that the TAP owners do not understand their business or situation.
These factors have combined to create a paranoia among the em-
ployees and a seige mentality of the Enterprise.”

I do not ask you to agree or disagree with that characterization. I
use it as a springboard to discussion — I am trying to find which of
you in your statements talked about sort of what you now have in
place to deal with the current situation.

Obviously, because you said that you are not going to go forward
with the Wackenhut investigation does not mean you have given
up your right to try to secure documents in the business oper-
ations, and what have you. Right?

Mr. Rusnack. That is correct.

The Chairman. And so it seems to me that, as it was said yester-
day by Mr. Hermiller, and again today, that, well, if our employees
are upset, there are plenty of avenues for them to take that issue
to us and to address it.

And, yet in this interview with Mr. Smith — he is general counsel
for Alyeska, right?

Mr. Rusnack. He was at that time.

The Chairman. Former, excuse me.

Mr. Rusnack. Yes.

The Chairman. And Mr. Bilgore is ARCO’s attorney.

Now this is their impression, and they don’t work at Alyeska
onsite, day to day. Right? Bilgore I assume is in Los Angeles?

Mr. Rusnack. And you have to remember, this is not a tran-
script. This is the gentleman at Paul, Hastings’ recollection

The Chairman. This is a summation by Paul, Hastings.

Mr. Rusnack [continuing]. And characterization of Ms conversa-
tion with these two gentlemen.

The Chairman. Correct.

But what concerns me, and as we look at this over the long term,
is if we assume for a second that the characterization is correct, or
partially correct, it becomes a key component

Mr. Rusnack. But I want to

The Chairman. I am not asking you to do that, but

Mr. Rusnack. I wanted to make one point, also, that this was not
a conversation where Mr. Bilgore and Mr. Smith were in the same
conversation or room together. These were separate conversations
that Mr. Burns had, one via telephone with Mr. Smith, and one
personally with Mr. Bilgore. So once again, it is his melding togeth-
er of two separate conversations.

256

The Chairman. And for that reason, let us discard your need to
react to that. Let me raise the issue, if I will, that obviously your
employees have leaked over a long period of time a lot of informa-
tion, a lot of documents.

Mr. Rusnack. Apparently so.

The Chairman. And only in this operation, there was the box
that was recovered from a stolen car that was at EPA, and appar-
ently sent back to trustees, and so forth.

Mr. Rusnack. And what we don’t know is, I mean there are at
times over 2,000 employees in this organization. Out of those 2,000,
it could be one; it could be two. When we say “employee”

The Chairman. Right. We do not know if you have a few employ-
ees with a lot of documents, or a lot of employees with a few docu-
ments.

I do not envy you your position.

Mr. Rusnack. That’s right.

The Chairman. But somehow, whether it is a few or a lot, there
is a notion that they sire better off going outside of the channel.

What do you do? I mean, you are in a very contentious business.
You are in a very contentious place, and you are an extremely
large operation within the State of Alaska. As testified here, you
are 25 percent of the domestic oil. You run in your daily business,
you are involved in almost every environmental law that this Con-
gress has created.

What do you do to assure your employees that there is in fact
real avenues for the discussion and the determinations about these
activities?

Mr. Rusnack. I think, Congressman, the first thing we do, obvi-
ously, is to run the organization appropriately and maintain our
vigilance in terms of obeying all environmental laws and regula-
tions.

So the first thing we do is run the organization correctly.

The second is, we try to create an environment — in fact, in an
earlier response to a question from Mr. Richardson, I mentioned
that Mr. Hermiller in particular has been doing an outstanding job
of trying to build a sense of teamwork, a sense of accountability in
this organization.

He has, in my little over a year of association with Alyeska, we
members of the Owners Committee have gone up and made presen-
tations to employees.

I, myself, have gone up and made speeches to employees and im-
pressed upon them the interest of the Owner Companies, as well as
the management, to obey laws and regulations, and that that is the
first priority of our organization, and we want all employees to do
that.

And if any employee is aware of any situation, we want them to
take action, whether it is to come to us, or to go to the proper au-
thorities. We must operate this system appropriately.

So to try to create that environment and manage the organiza-
tion properly is the best defense against this type of activity.

The Chairman. Mr. Garibaldi, your company is the biggest
shareholder in this operation.

257

Mr. Garibaldi. Yes. I think the thrust of Mr. Hermiller’s efforts
since he has been up there following Exxon Valdez has been to try
to restore the pride that the employees have in the company.

I think it shook the corporate culture within Alyeska. I think
there is the “seige mentality,” I do not know exactly what the con-
text is of that, but I think there is a — there was a feeling, which
hopefully is being corrected, that Alyeska is being unfairly criti-
cized for all its actions, and there is no way out of this.

I think it is a long process, and 1 think Mr. Hermiller has taken
some very important strides in reestablishing Alyeska’s credibility
with the citizenry, with the governmental agencies, with the
media, and so on and so forth, and that is what this program is all
about.

The Chairman. You may not have this information, but is this
problem uniquely an American problem? Or does BP have these
problems in its overseas operations? Do you have the leaking of
documents? Is this cultural?

Mr. Garibaldi. I cannot make a comparison. I do not know. In
my own personal experience, this has been — I have never seen an
organization come under as much pressure from the outside world
as occurred to Alyeska following the events of the Exxon Valdez
spill.

The Chairman. Mr. Taylor.

Mr. Taylor. Mr. Chairman, I will pass at this time. Thank you.

The Chairman. Any further questions by the Members of the
committee?

[No response.]

The Chairman. Mr. Garibaldi, there was some confusion raised
yesterday I think with respect to the questions of the detailed bil-
lings. The committee has asked for the detailed billings with re-
spect to this operation, the cost of the operation, and who paid for
it, and what are the ongoing costs of this operation.

Can you tell us where we are with respect to those? There was
some earlier discussion that Wackenhut had lost some of this infor-
mation in their computer, or were unable to retrieve it because
only one person had the self-destruct code where this information
apparently has been stored.

It is not quite clear.

But when it all gets down to it, you guys are paying the bills
here in one form or another. Do you know where we are with re-
spect to that?

Mr. Garibaldi. I have not looked at or talked with anyone about
the cost aspects of this operation.

The Chairman. I would restate our desire on behalf of the com-
mittee to have that information in the form in which we have re-
quested it. Whatever help you can give us with respect to that, I
would appreciate it.

Mr. Garibaldi. Yes, sir.

The Chairman. Here is where we are. Mr. Taylor, you can cor-
rect me, but Mr. Taylor is waiting for the tapes to be queued up
that will enable him to ask a number of questions of this panel.

Mr. Taylor. Mr. Chairman, does anyone else have any questions
of this panel?

The Chairman. We do not. I do not have any from our side.

258

Mr. Taylor. I will withdraw those questions. I think I can get
some of my information from Mr. Hamel.

The Chairman. We will reserve your right, obviously, to submit
questions to the witnesses.

Mr. Taylor. Then that would allow us to release these wit-
nesses?

The Chairman. That would allow us to release these witnesses.
That would be good, huh? [Laughter.]

The Chairman. Short-timers in this hearing. Thank you, very
much for your testimony and for your time.

Mr. Rusnack. Thank you, very much.

[Witnesses Garibaldi, Warner and Rusnack excused.]

The Chairman. The committee will reconvene at 1:45.

[Whereupon, at 12:20 p.m., the hearing was recessed, to recon-
vene at 1:45 p.m., this same day.]

[AFTER RECESSION.]

The Chairman. The committee will reconvene. If we can, can we
close the hall door? Either everybody can get on this side or some-
body can get on the other side, but I would appreciate it if the door
would be closed during the hearing.

The committee reconvenes its oversight hearing on the Alyeska
Pipeline Service Company covert operation.

The next witness is Mr. Charles Hamel, former Independent Oil
Broker from Alexandria, Virginia, and Anchorage, Alaska.

Mr. Hamel, welcome to the Committee.

It is the practice of the committee to swear all witnesses who
appear before it in investigative hearings. Do you have any objec-
tion to being sworn?

Mr. Hamel. I do not.

The Chairman. Would you please stand and raise your right
hand.

Do you solemnly swear or affirm that the testimony that you are
about to give is the truth, the whole truth, and nothing but the
truth?

Mr. Hamel. I do.

[Witness Hamel sworn.]

The Chairman. Thank you.

You are advised of your right to counsel. The role of counsel
would be to advise you of your constitutional rights.

Do you desire to be represented by counsel?

Mr. Hamel. I am represented here, if I may, by my counsel,
Billie Pimer Garde and J.P. Hardy of the

The Chairman. I am sorry. I did not hear the second name.

Mr. Hamel. J.P. Hardy, H-a-r-d-y, of the law firm of Hardy, Mi-
lutin & Johns of Houston, Texas.

I am also represented here today by Professor of Law of the Dis-
trict of Columbia School of Law Tom Mack, if I may.

259

The Chairman. Thank you.

Mr. Hamel. I would also like to note that my wife is here and
my son, David.

The Chairman. Thank you.

STATEMENT OF CHARLES HAMEL, FORMER INDEPENDENT OIL

BROKER, ALEXANDRIA, VIRGINIA, AND ANCHORAGE, ALASKA

Mr. Hamel. Chairman Miller, Members of this committee, good
afternoon.

Thank you for giving me the opportunity to testify on the
Alyeska investigation conducted into my business activities and my
private life.

My name is Charles Hamel of Alexandria, Virginia. I introduced
my wife and my son, Chuck, Jr. I would like you to know he is a
Prince William Sound commercial salmon fisherman in Cordova,
Alaska.

I grew up in Watertown, Connecticut, attending Assumption
Prep School and a year at Assumption College in Worcester, Mas-
sachusetts. My sophomore year was at the Universit de Montpellier
in France, after which I was drafted into the United States Army
in Europe in the Korean War.

I served in Military Intelligence on loan to the French Army in
Koblenz, Germany. Upon my honorable discharge, I remained in
Europe as Administrative Officer of the Off-Shore Procurement
Program, U.S. Embassy in Brussels, Belgium, in support of the U.S.
forces in Korea.

In 1954 I returned home to continue my studies in foreign trade
here at Georgetown University School of Foreign Service. Senator
Hubert Humphrey helped me gain an elevator operator job in the
Capitol. Thereafter, I was a student staff member in the offices of
Senator Ralph Yarborough and Majority Leader Lyndon B. John-
son.

In 1958 I became the administrative assistant — and his first ad-
ministrative assistant — to the late Senator Thomas J. Dodd of Con-
necticut.

Following a few years in foreign trade, I again returned to the
Capitol for 2 years as executive assistant to my former prep school
roommate, Senator Mike Gravel of Alaska. Among my duties as his
assistant, I worked relentlessly to convince Alaska residents, com-
mercial fishermen, Natives, and the public that the oil industry
would be good for Alaska. It would surely build an environmentally
sound pipeline and port terminal. Prior to construction, I traveled
the 800-mile right-of-way from Prudhoe Bay to Valdez.

In the foreign trade business, I worked mainly as a management
consultant, and commodities, ship, and cargo broker/agen

In fact, I was provided Exxon documents that proved that Exxon,
ARCO, and British Petroleum were quite aware of the water prob-
lem.

I had sincerely believed that the Alaska oil executives and
owners of the Alyeska Pipeline would take prompt corrective
action. Nothing was done.

260

Instead, they denied the truth and apparently hoped that I would
forget about my business, the damage to my credibility and reputa-
tion, and my lost income. I could not do that then, or now.

I built my business not only on hard work, but on the honesty of
my word. When the Alyeska owners cheated my clients, they were
in effect cheating me out as a dishonest businessman before my
own clients.

In 1985, I decided to expose the dishonesty of the oil industry in
regards to the water-in-the-oil issue, and attempted to ensure that
there was some accountability of the industry in connection with
their business practices.

By this time, I had also come to the conclusion that the oil indus-
try was turning Alaska into an environmental disaster. Employees
I talked to in Valdez, friends I knew in the industry, people I had
worked with for years, were all discussing the dismal performance
of Alyeska in regards to their commitment to environmental and
worker safety.

I realized that I was not the only victim of the dishonesty of the
oil industry in Alaska. We were all victims, and no one was doing
anything about it.

We were living in a conspiracy of silence waiting for an environ-
mental disaster to occur and, as you know, it did. I decided I had to
do something to prove to the public that the oil industry had violat-
ed their legal and moral obligations to Alaska.

The more I heard, the angrier I got about what was going on.
Alyeska was polluting the water by introducing toxic sludge, in-
cluding cancer-causing benzene, into the pristine waters of Port
Valdez and Prince William Sound.

Alyeska was poisoning the Valdez fjord’s air by venting extreme-
ly hazardous hydrocarbon vapors directly into the atmosphere.
There was no regulatory oversight, and thus no regulatory viola-
tions. It was if the the environmental regulations of the United
States did not even apply north of the Canadian Border — no regu-
lators, no oversight, no enforcement, nothing.

In fact, the oil industry was not putting out anything but poison
and lies.

In order to pursue the excessive water-in-the-oil matter, I filed
an administrative complaint with the Alaska Public Utilities Com-
mission, the APUC. At the hearing, former Alyeska employee
Erlene Blake, at great risk, testified that as senior laboratory tech-
nician responsible for testing the amount of water in the oil, she
continually discovered excessive water in the oil, but had been di-
rected by her supervisors to falsify the log entries to show only ac-
ceptable levels in the samples.

During this same period, she was required to falsify laboratory
analysis with regard to water quality. The reports to the U.S. Envi-
ronmental Protection Agency, the EPA, were false.

Because she was so troubled by those instructions, as suggested
by an assistant lab technician, she secretly maintained log books of
duplicate entries, recording the true lab analysis beside the falsi-
fied data — a red book for the water and oil, and a yellow log book
for the EPA violations.

Alyeska adamantly denied her allegations and discredited her
testimony by claiming she couldn’t produce the notebooks with the

261

double entries of oil and water. In fact, Ms. Blake did not produce
the logs because an Alyeska supervisor broke open her personal
locker and stole them.

She couldn’t prove her allegations, and neither could I. But we
knew it was true, and so did Alyeska.

Not long after the hearing, I was contacted by an Alyeska em-
ployee, Bob Scott. Two Alyeska supervisors boasted to Mr. Scott
and several fellow technicians that the log books had been removed
from the locker, had not been destroyed, and were not produced as
required by the APUC subpoena.

He was ashamed of Alyeska management’s illegal actions. He
knew that Alyeska had cheated me, had deceived the PUC, and
had discredited one of their own honest employees. He also knew
that Alyeska was violating numerous environmental and worker
safety regulations.

Bob Scott was among the first of many employees that provided
me information about violations of environmental regulations by
Alyeska. As I learned of these abuses, I in turn provided the infor-
mation to the appropriate Government agencies responsible for in-
vestigating these matters, including EPA, the General Accounting
Office, and the Alaska Department of Environmental Conservation,
the Attorney General of the United States, and the Director of the
GAO.

In the beginning, it was very difficult to get any Government
action on the employees’ allegations. I then turned the information
over to the press, and sometimes to Members of Congress.

There was a profound skepticism everywhere that the oil indus-
try would knowingly pollute the environment and harm their own
employees in Alaska.

The Alyeska public relations campaign was working. Few news-
papers would print the facts. Few regulators would even listen.
Alyeska tried hard to discredit me by attacking my motives, my
sources of information, my credibility, and attempted to portray me
as a vengeful, if not slightly insane, opponent of the oil industry.

But their “kill the messenger” approach backfired. It seemed
that the harder Alyeska tried to discredit me publicly, the more
their employees came to me with information privately. In fact,
frequently the public denial of facts, known to be true to Alyeska
employees, led those employees to my doorstep.

By the end of 1985, I had provided substantial documentary evi-
dence to the EPA about environmental wrongdoing by Alyeska.
Rather than deal honestly with these facts, Alyeska sued the EPA
to force disclosure of the documents.

The U.S. District Court and the U.S. Court of Appeals, I am
grateful to say, denied Alyeska access to the documents because to
do so could have identified my sources who feared retaliation.

In 1985, the oil industry attempted to find out what it would take
to make me go away. As requested, I calculated my actual business
losses at $12 million. I also insisted that action be taken to clean
up the environmental issues I had raised, including an audit of the
Valdez terminal; a pollution monitoring program funded by
Alyeska and run by an independent group not accountable to the
oil industry; and a medical monitoring fund for the Alyeska techni-
cians who had been needlessly exposed to toxic vapors.

262

The industry obviously was not prepared to meet those demands
to get rid of me. I continued to receive information from employees:
horror stories of poison and pollution which I conveyed to the
media, Congress, and Government agencies.

Alyeska had to be dragged, kicking and screaming, through each
corrective action. However, it was apparent to the fishing commu-
nity leaders like Dr. Riki Ott and Rick Steiner of Cordova, my loyal
supporters throughout the years, that a major disaster was emi-
nent.

Early in 1985, the severity of the problems demanded congres-
sional intervention and your committee’s majority staff agreed. But
within weeks, the Exxon Valdez oil spill occurred — 1989, I apolo-
gize there — and everything in Alaska changed forever.

The allegations I had been pointing out to the EPA for years to
no avail were suddenly “high priority,” and even the public began
to doubt the public relations departments of the oil industry.

The day after the spill, leaders of the fishing community and the
fish processors telephoned for my help. I immediately flew to
Valdez to do what I could.

In addition to helping the fishermen, I assisted this committee
and its majority and minority staff and counsel with housing and
support services during their onsite investigation, and also provid-
ed a network of information to members of the media who were at-
tempting to provide accurate coverage.

As with most disasters, even the oil spill brought out the best of
people in Alaska trying to help. I made numerous new friends, and
put old friends together with new ones. The evidence continued to
mount.

The more information I was provided, the more disgusted I
became. The more disgusted I became, the harder it was to ignore
the information that employees provided me.

What I perceived as the “Sovereign State of Alyeska” continued
to operate as a company without accountability, beyond regulation,
absent a corporate conscience. I desperately wanted to go on with
my life, to leave behind me the disillusionment that I felt, to do
what other men at my age are doing — walking on the beach with
their wife, enjoying the hard-earned fruits of their labor.

Instead, the fruits of my labor were stolen from me, and the
peace and contentment I tried to achieve were replaced by worry-
ing and concern for those people who turned to me for help. Per-
sonally, these were terrible, dark nights for Kathy and me — and it
went on, for years.

One day in April 1990, a Dr. Wayne Jenkins came to me. He de-
scribed his company, Ecolit Group, as a well-funded group of attor-
neys who wanted to help me. They would provide me the tools to
protect those workers who had turned to me for help.

Ecolit could help protect their jobs and supply me support staff
and assistance to manage what had become a full-time, financially
costly job of protecting whistleblowers and coordinating Govern-
ment investigations. I thought it was too good to be true.

As I wrote a note to my Anchorage attorney and faithful sup-
porter, Julian Mason, Ecolit was “the stuff that dreams are made
of.”

263

This Ecolit Group showed up in answer to a dilemma that
seemed to have no end for me. I was tired, almost broke, and
broken in spirit. I wanted to be able to turn the reins of these re-
sponsibilities over to someone else. My wife had been caring for her
invalid parents in Washington State without my help. It seemed as
if we had spent a decade fighting to keep what we had, losing our
assets, and becoming the only hope for many Alaskans who turned
to us for help, for no one else was there for them to turn to.

The Ecolit Group seemed such a perfect answer. Dr. Jenkins was
anxious to learn all about my congressional contacts, my inform-
ants, interested media, and my plans. He expressed moral outrage
at the environmental wrongs being committed by the oil industry,
and was anxious to provide legal support to stop the polluting, the
dumping, and other wrongs that I revealed to him.

Now that I have had the opportunity to review the transcripts of
the tapes of my meetings with Wayne Black, I am embarrassed at
many of the things that I said trying to get him interested in help-
ing to do the right things without compromising my sources.

Obviously I did compromise many of them. Inadvertently, of
course, but nonetheless I let them down — and I will have to deal
with that.

I also let this committee down. In my zeal to find an answer to
the problems I was facing — no resources and increasing obligations
to more and more people — I exaggerated my influence with this
committee and I exposed information that I had been entrusted
with my committee staffers.

In my business activities, I knew that if it sounds too good to be
true, it probably isn’t true. In this instance, I failed to recognize
the warnings that should have tipped me off to Ecolit’s true pur-
pose.

Alyeska successfully launched an internal “witch hunt” to target
everyone who had communications with me. Unfortunately, many
people who don’t even know me are being taken here. By illicitly
obtaining AT&T telephone records, they identified the people who
we called nationwide and people who called us, and, worst of all,
violated my confidences with people who trusted me.

Bob Scott was fired.

He lost his home.

And he lost his retirement.

Others have lost their jobs, become suspected of being sources of
information, and now live in fear of being monitored by their em-
ployer. All that I tried to do to help stop Alyeska’s wrongdoing was
being turned upside down by them.

I am repeatedly asked how all this makes me feel. When I first
learned of the surveillance activities, I was afraid for my family
and friends.

264

Next, I became angry — furious that Alyeska would stoop to dis-
honesty, deception, and theft out of paranoia that the trust would
somehow find its way to the public.

It is the classic psychological projection when Alyeska justifies
their elaborate sting operation by claiming that I had "‘stolen”
their documents.

I never picked through Alyeska's trash, broke into its office,
taped their phone calls.

I never posed as one of their own.

I never attempted to destroy their careers or, worse, invade their
families’ privacy.

I have always done exactly as I said I was going to do: insist on
responsible environmental management of the oil industry in
Alaska.

Today, I am simply saddened and disgusted but, in a strange
way, grateful and relieved that this entire incident has come to
light, because it demonstrates better than I could ever do that
Alyeska and its owners cannot be trusted.

The last 10 years of my life have been spent trying to warn the
public that Alyeska and Exxon cannot be trusted with our natural
resources. They cannot be trusted as business partners. They
cannot be trusted about their alleged claim that we desperately
need more oil.

It is now up to the Congress to sort out the truth from all the
lies.

In 1988, ARCO, Exxon, and British Petroleum failed to tell this
committee about the existence of the Point McIntyre billion barrel
oil field directly under the West Dock — which many of you have
seen — virtually in sight of the Alyeska Pipeline, while they were
testifying that Prudhoe Bay was running dry.

In fact, both ARCO and Exxon knew that they had discovered
the Point McIntyre field years earlier.

In 1989, my general partner, Exxon, told me that our Point
McIntyre leases were dry.

I sold my interest in the leases for what Exxon told me was a
fair price. Several weeks after selling Exxon my interests, the
major discovery was announced. Once again, they lied to you, they
lied to the Congress, they lied to the public, and they defrauded all
of us.

The public relations department of the oil industry, their lawyers
and lobbyists desperately want this committee and the public to be-
lieve that I attempted to humiliate the oil industry in retaliation
for the economic losses I suffered.

Alyeska and the oil industry have tried desperately for years to
convince themselves and the public that I am an extortionist — a
businessman motivated to expose environmental wrongs for person-
al profit.

The truth is that the oil companies were, and continue to be, mo-
tivated to ignore environmental wrongs to increase corporate
assets.

Do not misunderstand me.

I believe that responsible oil development is necessary to our na-
tional interest. However, Alyeska and its oil company owners be-
lieve that in order for someone to be for the oil business, one must

265

also be against environmental protections that might stand in the
way of corporate profits.

I refuse to believe that fallacy, and I certainly refuse to conduct
myself and my activities in a manner that these members of the oil
industry find acceptable.

I refuse to believe that the only way to advocate for a clean envi-
ronment and regulatory compliance is to take a vow of poverty and
join a not-for-profit environmental organization.

I also refuse to believe that I must choose between pursuing the
economic damage that I have been caused by Exxon and the other
Alyeska owners and insisting that they clean up their environmen-
tal act.

Most importantly, I refuse to believe that any citizen of this
country has to tolerate the invasion of privacy that I have been
subjected to simply because I have exercised my constitutional
rights and responsibilities as a citizen to petition Congress and to
assist the news media in a presentation of facts and evidence that
certain members of the oil industry have chosen to ignore.

I may not ever be able to walk on the beach with my wife in
peace, or to recoup the money that I have been cheated out of, but
both my wife and I will know that we have done everything within
our power to keep the beaches clean for our children and our
grandchildren.

As a final note, I want to state publicly how deeply my wife and
I appreciate the courage and honesty of the former Wackenhut em-
ployees and investigators who came forward and told the truth.

The Nation and Alaska are better because of the integrity of
these people.

Had it not been for Rafael “Gus” Castillo, Ana Contreras, Sher-
ree Rich, Ricki Jacobson — who was a victim, just like I was;
Adriana Caputti, Mercy Cruz, David Ramirez, and others, none of
this would have come to light. These are brave individuals who had
nothing to gain by coming forward, but had much to lose.

Each of these employees, like the many Alyeska employees who
took similar risks to bring forward the truth about Exxon and
Alyeska’s activities, have more integrity than the oil industry
could ever buy, and more courage than Alyeska could ever defeat.

Thank you for giving me the opportunity to testify, and I would
be glad to answer any questions that you may have.

[Prepared statement of Mr. Hamel follows:]

266

CHARLES HAMEL

Chairman Miller, Members of the Committee, Good Afternoon.

Thank you for giving me the opportunity to testify on the
Alyeska investigation conducted into my business activities and my
private life.

My name is Charles Hamel, of Alexandria, Virginia. May I
introduce my wife, Kathleen Morgan Hamel and my son Chuck, Jr.,
Prince William Sound commercial salmon fisherman of Cordova,
Alaska. Accompanying me this afternoon is my friend and counsel,
Billie Pirner Garde.

I grew up in Watertown, Connecticut, attending Assumption Prep
School and a year at Assumption College in Worcester,
Massachusetts. My sophomore year was at the Universite de
Montpellier in France, after which I was drafted into the United

States Army in Europe during the Korean War. I served In Military
Intelligence on loan to the French Army in Koblenz, Germany. Upon
my honorable discharge, I remained in Europe as Administrative
Officer, Off-Shore Procurement Program, United States Embassy, in
Brussels, Belgium, in support of the U. S. forces in Korea. In
1954 I returned home to continue my studies in foreign trade here
at Georgetown University School of Foreign Service • Senator
Hubert Humphrey helped me gain an elevator operator job in the
Capitol. Thereafter I was a student staff member in the offices of
Senator Ralph Yarborough and Majority Leader Lyndon B. Johnson.

In 1958 I became the Administrative Assistant to the late

Senator Thomas J. Dodd of Connecticut. Following years in foreign

- 2 -

267

trade, I again returned to the Capitol for two years as Executive
Assistant to my former prep school roommate. Senator Mike Gravel
of Alaska. Among my duties, as his assistant, 1 worked
relentlessly to convince Alaska residents, commercial fishermen.
Natives and the public that the oil industry would be good for
Alaska and would surely build an environmentally sound pipeline and
port terminal. Prior to construction, I traveled the 800 mile
right-of-way from Prudhoe Bay to Valdez.

In the foreign trade business, I worked mainly as a management
consultant, and commodities, ship and cargo broker /agent. In this
capacity, I had the opportunity to represent foreign countries and
arrange purchases of grain and other commodities on their behalf.
Once I negotiated the purchase, I would arrange the ocean
transportation of those commodities to other parts of the world.

I also brokered the sale of oil and arranged long term crude tanker
contracts. Eventually, I became an independent oil and shipping
broker. In addition I acquired partial ownership in oil leases in
Alaska and the lower U.S. I worked very hard and was fortunate
enough to be very successful for a period of years.

In 1980, all my hard work and success began to fall apart when
my clients discovered that they were not getting the crude that
they were paying for, but were instead receiving oil that was
significantly diluted with water. I could not cover the losses
and by 1982 I had lost my clients, my source of income, and my
credibility in the eyes of the business community I represented.
From that point forward I began to lose everything I had worked for

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over the years.

At first, Exxon executives led me to believe the dilution
problem was caused by malfeasance at the Panama Canal trans-
shipment point. My investigations in Panama proved otherwise. I
brought my discoveries to the attention of Exxon and other oil
company executives who I had come to know personally over the
years. However, soon I realized that the water in the oil was no
mistake and it was, by no means, limited to me or my clients. In
fact, I was provided Exxon documents that proved that Exxon, Arco
and British Petroleum were quite aware of the water problem.

I had sincerely believed that the Alaska oil executives and
Owners of the Alyeska Pipeline would take prompt corrective action.
Nothing was done. Instead they denied the truth, and apparently
hoped that I would forget about my business, the damage to my
credibility and reputation, and my lost income. I could not do
that then, or now. I built my business not only on hard work but
on the honesty of my word. When the Alyeska owners cheated my
clients, they were, in effect, making me out as a dishonest
businessman before my own clients.

In 1985, I decided to expose the dishonesty of the oil
industry in regards to the water in the oil issue, and attempted to
insure that there was some accountability of the industry in
connection with their business practices. By this time I had also
come to the conclusion that the oil industry was turning Alaska
into an environmental disaster. Employees I talked to in Valdez,
friends I knew in the industry, people I had worked with for years

269

were all discussing the dismal performance of Alyeska in regards to
their commitment to environmental and worker safety*

I realized that I was not the only victim of the dishonesty of
the oil industry in Alaska - we were all victims, and no one was
doing anything about it* We were living in a conspiracy of silence
waiting for an environmental disaster to occur and, as you know,
it did* I decided that I had to do something to prove to the
public that the oil industry had violated their legal and moral
obligations to Alaska* The more I heard, the angrier I got about
what was going on. Alyeska was polluting the water by introducing
toxic sludge, including cancer-causing benzene, into the pristine
waters of Port Valdez and Prince William Sound* Alyeska was
poisoning the Valdez fjord's air by venting extremely hazardous
hydrocarbon vapors directly into the atmosphere. There was no
regulatory oversight, and thus no regulatory violations* It was as
if the environmental regulations of the United States did not even
apply north of the Canadian Border - no regulators, no oversight,
no enforcement — nothing. In fact, the oil industry wasn't
putting out anything but poison and lies*

In order to pursue the excessive water in the oil matter, I
filed an administrative complaint with the Alaska Public Utilities
Commission CAPUC"). At the hearing, former Alyeska employee,
Erlene Blake * at great risk, testified that, as senior laboratory
technician responsible for testing the amount of water in the oil,
she continually discovered excessive water in the oil, but had been
directed by her supervisors to falsify the log entries to show only

270

acceptable levels in the samples* During this same period, she was
required to falsify laboratory analysis with regard to water
quality. The reports to the United States Environmental Protection
Agency ( N EPA N ) were false. Because she was so troubled by those
instructions, as suggested by an assistant lab tech, she secretly
maintained log books of duplicate entries, recording the true lab
analysis beside the falsified data — a red book for the water in
oil and a yellow log book for the EPA violations.

Alyeska adamantly denied her allegations and discredited her
testimony by claiming she couldn't produce the notebooks with the
double entries of oil and water. In fact, Ms. Blake could not
produce the logs because an Alyeska supervisor broke open her
personal locker and stole them. She couldn't prove her
allegations, and neither could I. But we knew it was true. So did
Alyeska.

Not long after the hearing I was contacted by an Alyeska
employee - Bob Scott. Two Alyeska supervisors boasted to Mr. Scott
and several fellow technicians that the log books had been removed
from her locker, had not been destroyed and were not produced as
required by the APUC subpoena. He was ashamed of Alyeska
management's illegal actions. He knew that Alyeska had cheated me,
had deceived the APUC, and had discredited one of their own honest
employees. He also knew that Alyeska was violating numerous
environmental and worker safety regulations.

Bob Scott was among the first of many employees that provided
me information about violations of environmental regulations by

271

Alyeska. As I learned of these abuses, I in turn, provided the
information to the appropriate government agencies responsible for
investigating these matters, including EPA, the General Accounting
Office and the Alaska Department of Environmental Conservation. In
the beginning it was very difficult to get any government action on
the employee's allegations. I then turned the information over to
the press and, sometimes, to members of Congress. There was a
profound skepticism everywhere that the oil industry would
knowingly pollute the environment and harm their own employees in
Alaska. The Alyeska public relations campaign was working. Few
newspapers would print the facts. Few regulators would even
listen.

Alyeska tried hard to discredit me by attacking my motives, my
sources of information, my credibility, and attempting to portray
me as a vengeful - if not slightly insane - opponent of the oil
industry. But their "kill the messenger approach" backfired. It
seemed that the harder Alyeska tried to discredit me publicly, the
more their employees came to me with information privately. In
fact, frequently the public denial of facts, known to be true to
Alyeska employees, led those employees to my doorstep.

By the end of 1985, I had provided substantial documentary
evidence to the EPA about environmental wrongdoing by Alyeska.
Rather than deal honestly with these facts, Alyeska sued the EPA
to force disclosure of the documents. The United States District
Court, and the U.S. Court of Appeals, I am grateful to say, denied
Alyeska access to the documents because to do so could have

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identified my sources, who feared retaliation.

In 1985 the oil industry attempted to find out what it would
take to make me go away. As requested, I calculated my actual
business losses at $12 million dollars. I also insisted that
actions be taken to clean up the environmental issues I had raised,
including an audit of the Valdez terminal, a pollution monitoring
program funded by Alyeska and run by an independent group not
accountable to the oil industry, and a medical monitoring fund for
the Alyeska technicians who had been needlessly exposed to toxic
vapors. The industry obviously was not prepared to meet those
demands to get rid of me.

I continued to receive information from employees — horror
stories of poison and pollution which I conveyed to the media.
Congress and government agencies. Alyeska had to be dragged
kicking and screaming through each corrective action. However, it
was apparent to fishing community leaders like Dr. Riki Ott and
Rick Steiner of Cordova, my loyal supporters throughout the years,
that a major disaster was imminent. Early in 1989 the severity of
the problems demanded Congressional intervention and your
Committee's Majority staff agreed. But within weeks the Exxon
Valdez oil spill occurred, and everything in Alaska changed
forever. The allegations I had been pointing out to the EPA for
years to no avail were suddenly "high priority," and even the
public began to doubt the public relations departments of the oil
industry.

The day after the spill, leaders of the fishing community and

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fish processors telephoned for my help. I immediately flew to
Valdez to do what I could. In addition to helping the fishermen,
I assisted this Committee with housing and support services during
their on site investigation, and also provided a network of
information to members of the media who were attempting to provide
accurate coverage. As with most disasters, even the oil spill
brought out the best of people in Alaska trying to help. I made
numerous new friends, and put old friends together with new ones.
The evidence continued to mount.

The more information I was provided, the more disgusted I
became. The more disgusted I became, the harder it was to ignore
the information that employees provided me. What I perceived as
the "Sovereign State" of Alyeska, continued to operate as a company
without accountability, beyond regulation, absent a corporate
conscience. I desperately wanted to go on with my life, to leave
behind me the disillusionment that I felt, to do what other men at
my age are doing — walking on the beach with their wife, enjoying
the hard earned fruits of their labor. Instead, the fruits of my
labor were stolen from me, and the peace and contentment I tried to
achieve were replaced by worrying and concern for those people who
turned to me for help. Personally, these were terrible, dark
nights for Kathy and me. And it went on for years.

One day in April, 1990, a Dr. Wayne Jenkins came to me. He
described his company, Ecolit Group, as a well funded group of
attorneys who wanted to help me. They would provide me the tools
to protect those workers who had turned to me for help, Ecolit

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could help protect their jobs, and supply me support staff and
assistance to manage what had become a full time, financially
costly, job of protecting whistleblowers and coordinating
government investigations. I thought it was too good to be true.

As I wrote in a note to my Anchorage attorney and faithful
supporter, Julian Mason, Ecolit was "the stuff that dreams are made
of." This Ecolit Group showed up in answer to a dilemma that
seemed to have no end for me. I was tired, almost broke, and
broken in spirit. I wanted to be able to turn the reins of these
responsibilities over to someone else. My wife had been caring for
her invalid parents in Washington State without my help. It seemed
as if we had spent a decade fighting to keep what we had, losing
our assets, and becoming the only hope for many Alaskans who turned
to us for help, for no one else was there for them to turn to.

The Ecolit Group seemed such a perfect answer. Dr. Jenkins
was anxious to learn all about my Congressional contacts, my
informants, interested media, and my plans. He expressed moral
outrage at the environmental wrongs being committed by the oil
industry, and was anxious to provide legal support to stop the
polluting, the dumping and other wrongs that I revealed to him.
Now that I have had the opportunity to review the transcripts and
tapes of my meetings with Wayne Black, I am embarrassed at many of
the things that I said trying to get him interested in helping to
do the right things without compromising my sources.

Obviously I did compromise many of them. Inadvertently, of
course, but nonetheless, I let them down and I will always have to

275

deal with that. I also let this Committee down. In my zeal to
find an answer to the problems I was facing - no resources and
increasing obligations to more and more people - T exaggerated my
influence with this Committee and I exposed information that I had
been entrusted with by Committee staffers. In my business
activities I knew that if it sounds tod good to be true, it
probably isn't true. In this instance, I failed to recognize the
warnings that should have tipped me off to Ecolit's true purpose.

Yet, I could never have known nor little imagined the extent
of the betrayal of my trust. The details of the Wackenhut
surveillance are now well known. Alyeska authorized the stealing
of our trash, monitoring and taping our telephone calls,
concealing video cameras in hotel rooms, stealing our mail, and
illegally obtaining our personal and financial information.
Alyeska successfully launched an internal "witch hunt” to target
everyone who had communications with me. By illicitly obtaining
AT&T telephone records they identified the people who we called
nationwide and people who called us, and - worst of all - violated
my confidences with people who trusted me. Bob Scott was fired,
lost his home, lost his retirement. Others have lost their jobs,
become suspected of being sources of information and now live in
fear of being monitored by their employer. All that I tried to do
to help stop Alyeska 's wrongdoing was being turned upside down by
them.

I am repeatedly asked how all this makes me feel. When I
first learned of the surveillance activities I was afraid for my

276

family and friends. Next I became angry, furious that Alyeska
would stoop to dishonesty, deception and theft out of paranoia that
the truth would somehow find its way to the public. It is the
classic psychological projection when Alyeska justifies their
elaborate sting operation by claiming that I had "stolen"
documents. I never picked through Alyeska 's trash, broke into its
offices, taped their phone calls. I never posed as one of their
own. I never attempted to destroy their careers, or worse, invade
their families * privacy. I have always done exactly as I said I
was going to do — insist on responsible environmental management
of the oil industry in Alaska. Today I am simply saddened and
disgusted; but, in a strange way, grateful and relieved that this
entire incident has come to light because it demonstrates better
than I could ever do that Alyeska, and its owners, cannot be
trusted.

The last ten years of my life have been spent trying to warn
the public that Alyeska and Exxon cannot be trusted with our
natural resources, they cannot be trusted as business partners, and
they cannot be trusted about their alleged claim that we
desperately need more oil. It is now up to the Congress to sort
out the truth from all the lies.

In 1988, ARCO, Exxon and British Petroleum failed to tell this
Committee about the existence of the Pt. McIntyre billion barrel
oil field directly under the West Dock, virtually within sight of
the Alyeska Pipeline, while they were testifying that Prudhoe Bay
was running dry. In fact, both ARCO and Exxon knew that they had

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discovered the Pt. McIntyre field years earlier. In 1989, my
General Partner, Exxon, told me that our Pt. McIntyre leases were
dry. I sold my interest in the leases for what Exxon told me was
a fair price. Several weeks after selling Exxon my interests, the
major discovery was announced. Once again, they lied to you, they
lied to the Congress, they lied to the public, and they defrauded
us all.

The public relations departments of the oil industry, their
lawyers and lobbyists desperately want this Committee and the
public to believe that I attempted to humiliate the oil industry in
retaliation for the economic losses I suffered. Alyeska and the
oil industry have tried desperately for years to convince
themselves and the public that I am an extortionist - a businessman
motivated to expose environmental wrongs for personal profit. The
truth is that the oil companies were and continue to be motivated
to ignore environmental wrongs to increase corporate assets. Do
not misunderstand me, I believe that responsible oil development is
necessary to our national interest. However, Alyeska and its oil
company owners believe that in order for someone to be "for" the
oil business, one must also be "against” environmental protections
that might stand in the way of corporate profits. I refuse to
believe that fallacy, and I certainly refuse to conduct myself and
my activities in a manner that these members of the oil industry
find acceptable.

I refuse to believe that the only way to advocate for a clean
environment and regulatory compliance is to take a vow of poverty

278

and join a not-for-profit environmental organization* I also
refuse to believe that I must choose between pursuing the economic
damage that I have been caused by Exxon and the other Alyeska
owners and insisting that they clean up their environmental act*
Most importantly, I refuse to believe that any citizen of this
country has to tolerate the invasion of privacy that I have been
subjected to simply because I have exercised my Constitutional
rights and responsibilities as a citizen to petition Congress, and
to assist the news media in the presentation of facts and evidence
that certain members of the oil industry have chosen to ignore* I
may not ever be able to walk on the beach with my wife in peace or
to recoup the money that I have been cheated out of, but both my
wife and I will know that we have done everything within our power
to keep the beaches clean for our children and grandchildren*

As a final note I want to state publicly how deeply my wife
and I appreciate the courage and honesty of the former Wackenhut
employees and investigators who came forward and told the truth*
The nation and Alaska are better because of the integrity of these
people. Had it not been for Rafael "Gus" Castillo, Ana Contreras,
Sherree Rich, Ricki Jacobson, Adriana Caputti, Mercedez Cruz, and
others, none of this would have come to light* These are brave
individuals, who had nothing to gain by coming forward, but had
much to lose* Each of these employees, like the many Alyeska
employees who took similar risks to bring forward the truth about
Exxon and Alyeska* s activities, have more integrity than the oil
industry could ever buy and more courage than Alyeska could ever

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defeat.

Thank you for giving me the opportunity to testify and I will
be glad to answer any questions that you may have.

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The Chairman. Thank you very much, Mr. Hamel, for your testi-
mony.

The committee will take a short recess for the purposes of some
discussions in the anteroom here.

Thank you.

[After recess.]

The Chairman. The committee will reconvene.

We thank people for sitting through the recess.

Are there any questions of Mr. Hamel?

[No response.]

The Chairman. If there are none, Mr. Hamel, let me thank you
very much for your testimony.

Let me say to you, as I have to other panels that have been
before us, first of all, thank you for your time, your trouble, and
your testimony.

We reserve the right to recall you, as we have the other panels.
This is an ongoing investigation into this matter.

To those who have appeared prior to this, to the people who have
sat through these hearings, we would make the same availability of
this committee that we have in most of these hearings. That is,
simply, that the record of this hearing will remain open for an ad-
ditional 2 weeks so that anybody who has listened to this — we are
already receiving fax’s and so forth as a result of this hearing —
people who believe they have information that would be helpful to
us, or if they have listened to testimony that they take issue with,
either witnesses who have appeared or not, this record will be held
open for that purpose.

That also extends to you, Mr. Hamel.

Mr. Hamel. I thank you.

The Chairman. Thank you very much.

The committee is now adjourned.

[Whereupon, at 2:58 p.m., the hearing was adjourned, subject to
the call of the Chair.]

APPENDIX

NOVEMBER 5 and 6, 1991

Additional Material Submitted for the Hearing Record

TESTIMONY OF
MERCEDES ILIANA CRUZ

BEFORE THE

UNITED STATES HOUSE OF REPRESENTATIVES
OF THE UNITED STATES CONGRESS
COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

2226 Rayburn House Office Building
Washington, D.C.

( 281 )

282

Good afternoon. Chairman Miller and Members of this
Subcommittee .

My name is Mercedes Iliana Cruz. I am testifying today in
response to a subpoena about my employment with the Wackenhut
Corporation .

I began working part-time with Wackenhut on July 5, 1990 and
was terminated on April 10, 1991. I worked 20 to 30 hours a week
at Wackenhut in addition to my full-time job at Op-Locka Airport
for Metro Dade County in airfield operations.

I was employed to work in Special Investigations Division
(hereinafter "SID") as an Analyst. My job as an Analyst was
looking for patterns in phone calls, accessing data bases through
the computer for various information on persons being investigated,
such as: social security; verification; corporate checks; property
checks for ownership; and, fictitious names. I began the Alyeska
project by building a large data base of phone tolls that involved
a lot of time with data entry. I received half sheets of paper of
computer generated tolls, similar to a telephone bill, containing
the number called, city and duration of call. Mr. Hamel had three
lines. I also had the home phone numbers of Alyeska 's top
personnel, legal department, and secretaries to see if they ever
called Mr. Hamel or anyone else that Mr. Hamel may have called on
his tolls.

I was hired specifically for Case Number 427, the Alyeska
case, and was told the purpose of the case was to get information
on Mr. Hamel. Our client, Alyeska, had been having trouble with

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Mr* Hamel because he was telling the media, Congress, environmental
regulatory agencies, and attorneys about Exxon and Alyeska's
wrongdoing and illegal actions in Alyeska. I was told that Mr.
Hamel was doing this because he had been an oil broker and felt he
was cheated by Exxon and Alyeska.

My first assignment was to put all the toll calls from Mr.
Hamel's home in Virginia from all over the country into a data
base. I took over the job from Ana Contreras. From that data
base we looked for patterns of calls similar to the ones Alyeska
employees made. I also input tolls from the internal telephone
logs of Alyeska and matched them to see if there was any
correlation between the two data bases. First, numbers on the
telephone list were called in an attempt to find out who was being
called by Mr. Hamel. Various stories were made up to get the
person who Mr. Hamel called to identify themselves and the relation
to Mr. Hamel. There were hundreds of calls. As names were
obtained, they were entered into the data base. Certain names and
numbers were flagged and highlighted on the printouts. Several
specific names that I recall as being "flagged" and highlighted
were the law firm of Groh, Eggers and Price, Robert Scott, Sea Hawk
Seafood, Stan Stephens and a software store. The tolls were input
from December 1989 through May, 1990.

The tolls were given to me by Rick Lund (whose alias was John
Foxx) . I do not know where or how he got them. Rick Lund was the
System Administrator and entered SID employees in the computer and
passed out the passwords. Rick Lund specialized in TSCM (Technical
Surveillance Counter Measures) which was "electronic spying. "

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There were no tolls after May 1990. After that Rick Lund
couldn't get any more tolls, he told me that he didn't know why
there weren't any more tolls and wondered if Mr. Hamel had changed
his long distance service. He attempted to get the missing months
from other sources in other phone companies but was unsuccessful.

Other surveillance was attempted on a Congressman, but I don't
recall the Congressman's name. I don't know what the objective
was, or how much, if anything, was accomplished.

There was a direct telephone line into the SID office called
the "Hello line" which was answered, "Hello, may I help you?" and
was to be answered this way at all times. It is my belief that
calls into this line were always recorded and was a direct line
into SID, bypassing the Wackenhut switchboard. It was for
undercover assignments when the investigators did not want to give
out their home number, so they used this number.

At some point prior to my employment , I was aware that Wayne
Black went to Alaska with other members of the SID unit. I do not
recall the exact date, with whom he met, or how long he was there.

Another one of my assignments was to take a recreational
vehicle to Alexandria, Virginia, for use in the undercover
operation .

On August 10, 1990, Adriana Caputi and I left the Wackenhut
Corporation to drive a recreational vehicle full of electronic
equipment to our destination. The RV was loaded by Rick Lund and
Vern Johnson. While the RV was being loaded, Adriana and I
received direct instructions from Mr. Wayne Black as to routing and
securing the RV as well as checking into SID while enroute. Prior

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to departure we were given a memo regarding the Florida Statutes on
what private investigators could and could not disclose if we were
stopped and assuring us that our activities were legal because of
a reciprocal agreement between Virginia and Florida* (See attached
letter from Wayne Black* )

We arrived in Arlington on August 11th and checked into the
Marriott at Crystal City, Virginia. The RV was used to transport
sensitive and expensive electronic surveillance equipment without
damage to the equipment, without going through the airport security
and without any outsiders' knowledge, as well as to provide a
listening post to be parked near Mr* Hamel's house for the
investigators in Alexandria* Some of the electronic equipment
loaded was a computer hard drive, monitor, keyboard, several
cables, printer, optical scanner, a CD ROM disk drive, small
surveillance cameras, several miscellaneous wires, tools, radios,
walkie-talkies, and one portable phone. The camper and equipment
were to stay in Virginia* The RV was rented from Cruise America by
Rick Lund on his American Express card.

When we arrived at the Marriott Crystal City, the camper did
not fit in the parking garage and we had the bell boy park it
outside in oversize vehicle parking. The bellhop unloaded the
camper for us. The computer equipment was brand new and was still
in the original IBM containers. The rest of the equipment was in
soft sided luggage, a few boxes and some tote bags. We kept the
equipment in our room. I departed on Sunday, August 12th for
Miami, leaving Adriana Caputi at the hotel with all the equipment
awaiting Rick Lund and Vern Johnson who were to arrive shortly

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after I departed for Miami.

The RV was in Virginia for approximately a month and a half
and was used to monitor Mr. Hamel. Rick Lund and Wayne Black found
it amusing that they received a parking ticket from local police
while conducting a surveillance operation in front of Mr. Hamel's
house. Rick Lund stated that they had pulled the dividing curtain
shut and were actively listening in on a conversation between Wayne
Black and Mr. Hamel when an officer stuck a parking ticket on the
windshield of the RV.

Rick Lund, Wayne Black, and Vern Johnson were discussing the
procedure for body wiring and the difficulties in transmission from
the wiring and the distance as well as being detected, and stated
that they were going to try to attempt to "bug" Mr. Hamel's
telephone.

At some point, I do not remember when, I overheard a
conversation between Rick and Wayne. They said they had been in
Mr. Hamel's home, and when Mr. Hamel left the living room where
they all were they inspected the telephone to see if they could bug
it. I understood they inspected the phone because they were
extremely frustrated that they could not get the tolls anymore and
thought there might be something on the phone itself which
prevented them from getting the tolls and they wanted to bug his
phones. They said they could not do it, I do not remember why.

On August 20, 1991, there was a lunch meeting on the case at
the Bakery Center in Coral Gables. Present at the meeting were
Wayne Black, Dale Matthews, Janet Lago, Adriana Caputi and myself.
Dale Matthews was a back-up on the case. At that meeting Adriana

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Caput i was instructed to take Dale Matthews and myself to the
undercover office, also referred to as the UC office, to
familiarize ourselves with the personnel in the area and to appear
as if there was a lot of activity at the Ecolit office (2000 S.
Dixie Highway, Suite H, Coconut Grove).

That office was an 8' x 10' room with a desk, chair,
telephone, one small couch and one answering machine. The office
was used as Ecolit 's Miami office and several visits were made
there daily by several investigators. We were instructed to call
the Miami Ecolit office daily to make it look like we had a genuine
business. It was a time-share office building and on that date we
contracted for telephone service so that Mr. Hamel would not be
talking to an answering machine anymore, and to make it seem like
we were a big operation.

We also subscribed to the Anchorage Daily News , and had it
shipped to the Miami Ecolit office. We were instructed to visit
the Ecolit undercover office once a day and pick up all the mail
and cut out any articles pertaining to Alyeska, Chuck Hamel and
Exxon and any oil activity in the area. The rent for the Miami and
Virginia Ecolit offices were billed to Alyeska, but was paid for by
money order from Wackenhut.

On August 29, 1991, I was briefed by Adriana Caputi, and told
to deliver a money order for rent to the undercover office.
Adriana also gave me the keys to the office. I also spoke to Rick
Lund about Wayne Black and Rick's instructions to make duplicates
of the taped evidence, both video and audio, and instructors about
the operation of the equipment.

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On August 31, 1991, I began copying evidence tapes (video and
audio) in quadruplicate for a meeting between Wayne Black, Rick
Lund, and Alyeska and Exxon representatives. Temporary employees
were brought in to transcribe the audio tapes for this meeting.
Also on August 30, 1991, I paid the rent on the undercover office,
picked up the mail, talked to the receptionist, and made sure that
there was some activity at the UC office that was seen by the
persons around the area in the building.

During this time I overheard a conversation between Rick Lund
and Wayne Black regarding a conversation they had with Mr. Hamel.
Mr. Hamel had told them about Exxon dumping waste oil into the
ocean to dispose of it. I was told that Mr. Lund and Mr. Black did
not want to disclose this information to anyone because the EPA
would come back and ask Wackenhut questions about Mr. Hamel, the
427 investigation, and possibly be involved in a lot of litigation
that would be extremely expensive.

After Case 427 was completed I' was doing other research work,
and on September 4, 1990, I had a meeting with Wayne and Rick about
my taking over the billing. I did the billing for all the SID
investigators. That involved taking all the time sheets and
entering each item and client. I did not enter the billing into
the computer until after Wayne had looked at the time sheets and
edited them at his discretion, without any written guidelines.
After that process I printed out a bill for each client, and gave
it to Wayne to check and edit, i.e., change the amount of time
worked or the amount billed or any comments that he wanted to
change or add. Then a fipal, corrected bill was made. The bills

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were printed and copied with one copy going to the client and the
other remaining in SID's billing book. The client received a bill
that was an itemized statement containing expenses incurred for
each investigator, as well as a description of each activity of the
investigator.

While Wackenhut had their own corporate accounting department,
Wayne Black did not allow the Wackenhut accounting department to do
the billing or even be involved in the SID operation. It caused a
lot of internal problems with the billing. Clients would send
checks to Wackenhut and SID would not know they had paid; or
clients were overdue on payment and SID would not know. The
billing was always done at least a month and a half late due to the
burden Mr. Black placed on Janet Lago, who had previously done the
billing. In fact, Janet Lago was overburdened with filing,
dictation and various other claims.

The billing process was as follows:

Each investigator would turn in a time sheet to Mr. Black at
the end of the work day. The time sheet contained every case they
worked on for the day. Wayne Black edited the time sheets and then
turned them over to me. I would input the time started, ended,
total amount of time spent, and a brief report on the activity
conducted into the computer. Various cases would be on one
investigator's activity sheet. After I entered the time slips, Mr.
Black would edit these sheets again as he saw fit, on time and
money. He would also keep the time sheets, instead of giving them
to the person doing the billing. When I got the billing we were
already a month behind. There were approximately five

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investigators actively working on cases and each dictating reports,
updates, and finalizations on cases, as well as dictating whatever
changes Wayne had made to the originals.

I remember that the bills for 427 did not have any client
label on, although the normal practice was to put the client name
on the bills. The 427 matter was "confidential" and this was not
the usual procedure for billing. I did not send the bills out. I
did billing for Case 427 for two months, September and October,
1990. During this time, the bill for September to Alyeska was
approximately $155,000.00 and the Bill for October was $50,000.00,
to be best of my recollection. Those charges included employees'
time, expenses, air fare, car rental, hotel, meals, and other
miscellaneous charges. I provided the bills to Wayne Black for him
to send out.

Sometime in November 1990, we were told to stop all
activities, and that we would begin winding down whatever we were
doing pertaining to the 427 Alyeska case. According to Wayne
Black, Alyeska had met with Exxon and others, and Exxon did not
want this to go any further, and that they wanted nothing to do
with this anymore because it was a big mess.

From November 26 1990, through February 4, 1991, I was not
working at SID at Wackenhut because they had no work for me. I
worked from February 4 to March 4, 1991, on other cases. On
April 10, 1991, Gil Mugarra had Adriana page me and when I returned
the call, Adriana advised me that Gil wanted to talk to me. Gil
informed me that my services were no longer needed. Gil apologized
for firing me, but told me that he was instructed to do so by Wayne

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Black.

Several months ago I was contacted by Mr. Hamel's attorney and
asked about my involvement in Case 427. I agreed to provide this
information to Congress.

I hope that this information is helpful to the Committee
investigating this matter. I will be pleased to try and answer any
questions that you may have.

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TESTIMONY OF

SHERREE RICH

BEFORE THE

UNITED STATES HOUSE OF REPRESENTATIVES
OF THE UNITED STATES CONGRESS
COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

2226 Rayburn House Office Building
Washington, D.C.

293

Good afternoon , Chairman Miller and Members of this
Subcommittee •

My name is Sherree Rich. I am testifying today in response to
a subopena about my employment with Wackenhut. I am currently a
Child Abuse Investigator with the State of Florida. Prior to that,
I worked for six months for the Wackenhut Corporation.

Prior to accepting employment with Wackenhut I had worked for
the Tallahassee Police Department for two and a half years, and the
Hillsborough County Sheriff's office for three and a half months on
a special undercover operation.

I accepted employment with the Wackenhut Corporation in
August, 1990, after applying and being interviewed at the Tampa
office of the Wackenhut Corporation. Since I was interested in
becoming an investigator I was referred to Wayne Black, of the
Miami Special Investigations Division (hereinafter "SID). Several
weeks after my initial interview I was contacted by Wayne Black for
an interview. Wackenhut arranged to fly me to Miami for an
interview at the SID offices. During that interview I advised Mr.
Black that I was interested in becoming an investigator. He agreed
to train me as an investigator. Because of recent undercover
experience in my previous job, he requested that I begin work on an
undercover operation that Wackenhut was conducting in the
Washington, D.C. area.

After completion of my background investigation I was hired,
and went to Miami for final processing and preparation for the
operation. The final preparation for leaving to conduct the

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activity was to get a large amount of cash for use in setting up
the undercover office.

Mr. Wayne Black and I flew up to Washington on or about August
11, 1990. On the flight to Washington, D.C. I was provided a
number of articles to read about Exxon's activities in Alaska,
environmental issues about oil spills, and the Alaska pipeline from
Alaska newspapers. We were joined later by Rick Lund and Vern
Johnson. We checked into the Crystal City Marriott Hotel, where I
stayed for approximately 4-5 weeks. All of my hotel expenses for
were covered by Wackenhut.

During the first few days after arriving in Virginia I was
briefed on what my duties were to be in connection with the
undercover operation. Initially I was told very little about what
the real purpose of the investigation was. I was directed to open
and set up an office, posing as "The Ecolit Group," which I knew to
be a false identity standing for "ecological litigation." This
included opening a personal bank account in my name, with ECOLIT on
the check. I deposited several thousand dollars. It also included
ordering cards with my name on the ECOLIT card identifying myself
as a "staff researcher." I also ordered cards for Wayne Black,
identifying him as Dr. Wayne Jenkins. As part of my cover I also
joined the Library of Congress as a researcher. I ordered the
Anchorage Daily News as part of the cover so that the office looked
legitimate. I also purchased several books about environmental
issues and several environmental posters, such as "SAVE THE WHALES"
and "SAVE THE EARTH" as props.

The bogus office was located at 2341 Jefferson Davis Highway,

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Suite 525, in the Century Building, Arlington, Virginia. The
office was in a su±~e of offices that shared common secretarial
answering and reception services, and a common lobby. In order to
appear legitimate I also received daily telephone calls from Miami,
posing as if it was the Miami ECOLIT office, as well as faxes and
occasional letters.

At about the sane time, Mr. Richard Lund, posing as Mr. John
Fox, rented a suite in the same location called Overseas Trading
Company. Although we were working together in this undercover
operation, we preterded only to know Mr. Fox casually because he
assisted in getting our computers. In fact, Mr. Rick Lund, and
another gentleman na ned Vern Johnson, wired the offices with video
and audio microphones and cameras for the purpose of recording all
of the communicatio is and transactions between Hamel and Black.
This included puttii g in a video camera inside a portable stereo
which was wired to Fick Lund's office where it was picked up on a
receiver and records i. The sound system was also wired through the
ceiling panels to th ? office two or three offices down the hallway.
I was present when £ 11 the wiring was done in these offices.

I was present c iring the time when Rick Lund and Vern Johnson
wired Ecolit's office in Arlington, Virginia. We arrived at the
QRC offices (where w; rented the Ecolit office) at night. Rick and
Vern ran wires f ro i John Fox's office. International Overseas
Trading, through th 2 ceiling into the Ecolit office. Rick had
attached the wires t > a remote controlled, toy dune buggy. He used
this vehicle to dri re across the inside of the ceiling from his
office, across the ntervening office to the Ecolit office so he

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could get the wires to the Ecolit office. He ran the wire from the
ceiling through a stanchion in the wall, cut a hole in the wall to
bring the wire out and ran the wire under the carpet.

Up until the opening of the office all I had been told was
that we were conducting the investigation into a person named
Charles Hamel. According to Wayne Black, Mr. Hamel had spent about
ten years trying to seek revenge on Exxon for receiving a raw deal
on oil brokering. Throughout the entire course of my involvement
with the undercover operation, Exxon and Alyeska were used
interchangeably by all of my superiors. I came to understand that
Aleyska was a company formed by seven oil companies, and assumed
that it was the Exxon portion of Alyeska that was requesting the
investigation •

As I became more familiar with the investigation I learned
that Mr. Hamel was receiving documents and information, allegedly
illegally, from sources within Alyeska. Wayne Black and Rick Lund
told me that Hamel would receive Exxon and Alyeska information and
then turn it over to Congressman Miller, and also get the
Environmental Protection Agency involved, and that by doing so
Hamel was causing Alyeska and Exxon a great deal of financial
hardship and negative publicity. It was my understanding that the
purpose of the investigation was to find out who the sources of
information were and let Alyeska know who they were, so that they
could handle the leaks. I believed that as soon as an employee was
identified he or she would be terminated. In fact, I believe that
one employee was identified and terminated during this time frame.

It was my understanding that the investigation would last for

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six months to a year. In order to staff the office I was told to
rent an apartment in Crystal City, Virginia. I did so; all of the
expenses and costs for the apartment were paid by Wackenhut,
including a rental car, gas, food, and utilities. The only thing I
was responsible for were personal telephone calls and personal
items. I was not aware of any State of Virginia or local authority
license to conduct this activity.

My job was to appear to be researching environmental causes in
and around the Washington, D.C. area, and to convince Mr. Hamel of
the legitimacy of the operation. Throughout the course of the
investigation, when Wayne "Jenkins" Black received documents from
Hamel, I was to scan those documents into a computer. I was
responsible for paying all of the bills for the office.

While the operation was going on someone from the Miami office
drove up a Recreational Vehicle Camper fully equipped with living
quarters and electronic surveillance equipment, such as portable
telephones, two way radios, and other equipment that I did not
recognize but understood to be used for picking up telephone calls.
The RV was parked near Mr. Hamel's condo and the park for one
night .

I was aware that Wackenhut had someone pick up Mr. Hamel's
trash to go through it for information, and also knew that while
Mr. Black was at Mr. Hamel's house he was wired to pick up all of
their conversations, and that during his visit there he went
through a bunch of Hamel's documents that were lying around and
read from those documents into the "wire" so that the information
could be transmitted back to Rick Lund. On one occasion I was also

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wired to go to Hamel's house, when I gave him a check for

$ 2 , 000 . 00 .

It was my understanding that Hamel was having personal
financial problems, and that part of the plan to "hook" him into
working with Wackenhut's undercover operations was to make funds
available to help him support his environmental causes. I
presented two checks to Mr. Hamel, one in the office and one at his
house.

I was never present at any meetings in the office or the hotel
room, and never went to dinner with Mr. Hamel, but I know that Mr.
Black met with him in the office and that those meetings were
videoed taped by Mr. Lund in his office down the hall.

The operation lasted about three months, during which time Mr.
Black came from Miami on a number of occasions. At the end of that
time frame I was told that the operation was closing down. I was
told that it was closing down because Alyeska attorneys wanted to
atop the operation. I believe that one of the concerns that led to
closing down the operation was because Wackenhut was confirming
that Hamel did, in fact, have information on environmental
wrongdoing which Wackenhut had no way to handle.

For the last few weeks of the operation it was unclear to me
how long it would actually last. Comments were made about closing
it down early. Then Mr. Black stopped talking to Mr. Hamel
entirely, and directed me to "cover" for him by saying he was in a
meeting or not in his office in Miami. To the best of my knowledge
Mr. Black never called him back. Then Mr. Black returned to Miami,
and I was instructed to close down the office and load the computer

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equipmc nt, files, posters, and all of the props and papers we had
collect ed into a rental van, and drive it to Miami, which I did.

I continued to work at Wackenhut until January, 1991. During
that t:me I had one further follow up involvement with the Hamel
investigation. Sometime in October or November, I was briefly
interv; ewed by two attorneys regarding my activities in the
Virginia office. I was only asked by them "why" I was hired, and
what my function was in Virginia. Prior to the interview I had
been told by Wayne Black to just answer the questions that they
asked ' ery briefly, and not to add anything.

0; my last day of work I was directed by Gil Mugarra to pick
up the irash for one of the other investigator's assignments. This
involv- d getting up at about 3:00 a.m. in order to insure that you
were a le to pick up the trash without being seen and before the
garbag pick up. I questioned this assignment since it was not my
case, md discussed it with other investigators and with Mr.
Mugarr . Following these conversations I believed that the
assign: ent had been returned to the original investigator. No one
ever t< Id me that the trash assignment was to be my last. The next
day, l Lack called me into his office and asked me what had
happen d. He advised me that I was being put on suspension because
I had refused" to pick up the trash. That was not true. He told
me tha he would call me the next morning around 8:30 a.m., instead
he cal ed me around noon the next day and advised me that I could
quit o be fired. I asked him if he would give me a good reference
if I c lit, and he said that the only thing that would be on my
person el file would be that I quit, so I resigned. Thereafter I

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moved back to Tampa.

I hope that this inf ormation is helpful to the Committee
investigating this matter. I will be pleased to try and answer any
questions that you may have.

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301

SUPPLEMENTAL STATEMENT OF
PICK! SUE JACOBSON
BEFORE THE

UNITED STATES HOUSE OF REPRESENTATIVES

OF THE UNITED STATES CONGRESS
COMMITTEE

ON INTERIOR AND INSULAR AFFAIRS

Committee On Interior and insular Affairs
United States House of Representatives
1324 Longvorth House Office Building
Washington, D.C.

302

Good afternoon, Chairman Miller and Members of this Committee,

My name is Ricki Sue Jacobson. I am here today in response
to the Committee's subpoena regarding my employment with Wackenhut
Corporation. I reside in Miami, Florida with my three children and
I am currently training to be an executive secretary.

I accepted employment with the Wackenhut corporation in
November of 1989. I had no previous investigative experience.
Until that time, 1 had worked as a realtor since approximately
1976. However, in early Fall of 1989, a friend of mine suggested
to me that I would make a good investigator and recommended that
I contact an acquaintance of hers if I were interested. Her
acquaintance was Mr. Wayne Black. At that time, Mr. Black was not*
with Wackenhut Corporation, but was operating his own practice. I
contacted Mr. Black and he explained that his firm was being bought
out by Wackenhut and that he would soon be employed there. After
several meetings and discussions, and once Mr. Black had joined

Wackenhut, Z was hired as an entry level trainee. For licensing

purposes, my position was known as "private investigator intern".

At the time my employment began, Mr. Black told me that my
duties would basically involve property and asset searches,
especially since I had a good real estate background. He also
indicated that I would occasionally be doing "witness locates".

In the initial weeks of my employment, I worked with more
experienced investigatory. During this period, I also worked on
6ome surveillance assignments.

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Page Two

In approximately February or March, 1990, Mr. Black asked
if I would like to travel to Alaska on an assignment, originally,
I hesitated because 1 do not like being away from my children for
long periods of time. However, after being assured by Mr. Black
that 1 would be gone only briefly, I agreed. I was not told the
name of the client or the nature of the operation. I was given
only the case number, which was 427.

Mr. Black briefed me for my assignment during March of 1990
and Z was due to leave around March 20, 1990. In my briefing, Mr.
Black told me I would be attending an environmental conference in
Anchorage, that I would be travelling under an assumed name, and
that I was to have no public contact with Mr. Black or Mr. Rick
Lund while in Anchorage. Mr. Lund was an investigator under
contract with Wackenhut who often worked with Mr. Black. My
assumed name was "Ricki Eidelson". Eidelson is my maiden name and
Mr. Black suggested I use it since it would be easy to remember.
In the course of my briefing, I was also instructed by Mr. Black
to become generally familiar with various ecological groups because
I would be attending the conference pretending to be an ecological
researcher for an environmental group in Miami. The environmental
group X would be representing was called "Ecolit" and was a
fictitious organization created by wackenhut for the purpose of
this assignment.

After preparing in accordance with my instructions, U2*ge~

Three

travelled to Anchorage on or about March 20, 1990. Prior to my
departure I was given false identification documents to support my
assumed name. These documents included a Florida driver's license
Issued in my fictitious name, business cards from Ecolit, and
luggage tags. Mr. Black and Mr. Lund travelled on board the same
plane, but we had no contact with each other, as per the
instructions I had received. Mr. Black's assumed name was Wayne
Jenkins, also supposedly with the Ecolit group. I believe Mr.
Lund's assumed name was John Fox, though I am not certain. At this
time I still had no knowledge of the client's name, the nature of
the operation or effort of which I was a part, or the name of any
persons who might be the subject of any investigation to be
conducted by Wackenhut. After my arrival in Alaska, I

travelled to my hotel, the Captain cook, and registered. Mr. Black
and Mr. Lund also travelled to the hotel, though separately from
me. Shortly after we arrived at the hotel, Mr. Black and Mr. Lund
met with me in my room and discussed various details of my
assignment. The essence of their instructions was that I was
simply to attend, and take notes at, the environmental conference
scheduled to begin the next morning. However, in the course of
this meeting, Mr. Lund also asked that I attempt to see the
conference registration list and to let him know if the name
"Charles Hamel" appeared on that list. This was the first time I
ever heard the name "Charles Hamel", and nothing further was said

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Page Four

about him. When I inquired later about the list, Z was told that
a registration list was not available and I therefore reported to
Mr. Black and Mr. Lund that Z was unable to determine whether Mr.
Kamel had registered at the conference.

On March 22, 1990, the third day of the conference, while I
was seated with other conference attendees in the dining room of
the hotel, Mr. Black approached me and whispered "the guy we want
you to eyeball is in the lobby." I believe these were Mr. Black's
exact words. He then motioned for me to follow him. Z was surprised
because I did not know anything was expected of me beyond my
attendance at the environmental conference. However, Z walked to
the doorway of the dining room and Mr. Black pointed out Mr. Hamel
standing in the lobby. Mr. Hamel was speaking with a man and a
woman. Z observed them for a few moments, but did not overhear
their conversation. When they left the lobby, Z returned to the
dining room and later reported my observation to Mr. Black.

During the evening of March 22, 1991, the day the conference
ended, Z visited a local restaurant and bar with a fellow
conference attendee. Upon my return to the hotel, 1 noticed
Charles Hamel standing in the lobby area. Believing that Mr. Black
and Mr. Lund would be interested in Mr. Hamel's whereabouts, I
contacted one of them (I do not remember which) and advised him of
Mr. Hamel's presence in the lobby. X was instructed to keep Mr.
Hamel under observation and, if he left the lobby area, to follow
him. After a short time, X followed Mr. Hamel into the hotel bar.

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He was in the company of another gentleman and 1 learned later that
his name was Pick Steiner. I sat a few stools away from Mr. Hamel
and Mr. Steiner and, after a few moments, I used the phone in the
bar and called Mr. Black or Mr. Lund (I do not remember which), and
notified him of my whereabouts. A few moments later, Mr. Black
and Mr. Lund entered the bar separately, as if they did not know
one another, and took separate seats. After approximately twenty
to thirty minutes, Mr. Hamel and Mr. Steiner left the bar. My
observation terminated at that time. However, I believe either Mr.
Black or Mr. Lund followed Mr. Hamel and Mr. Steiner out of the
bar. During the time 1 was in the bar, I do not recall engaging
in any direct conversation with Mr. Steiner or Mr. Hamel, and I do
not believe I did. However, I recall having brief eye contact with
one or both of them in the course of various comments I was
exchanging with the bartender.

Sometime after I returned to my room that evening, Mr. Black
and Mr. Lund came to my room and we discussed the events of that
evening and our travel arrangements home, now that the conference
had ended.

I left Alaska on the morning of March 24, 1991. While waiting
to board my flight in the Anchorage Airport, I noticed Mr. Hamel
in the concourse area. I was very surprised that I happened to be
booked on the same flight. After being seated in the coach
section, Mr. Hamel noticed me and apparently recognized me. After

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Page six

exchanging a few words, he invited me to sit with him and Z did.
I was very nervous because my assignment was over and I did not
know how to handle this particular situation. Since Mr. Hamel had
just been the subject of our surveillance in the bar, and because
I wanted to be very careful, X introduced myself using my assumed
identity and purpose.

Mr. Hamels destination was Seattle, the first stop on my
flight to Miami. During the time we sat together, Mr. Hamel very
candidly discussed many things of concern to him, including a
lawsuit with Exxon, his own oil leases and problems he encountered
with water being mixed with his oil. He also mentioned that he had
various sources inside Alyeska Corporation feeding him various
types of sensitive information. He discussed secret meetings and
even the suicide of one person involved. I did not understand much
of what he was saying and felt very astonished and uncomfortable
at the great degree of trust he was showing a complete stranger.
In addition to these discussions, Mr. Hamel asked me a lot about
myself and about Ecolit. In the course of that part of our
discussion he mentioned that he would be coming to Miami and that,
when he did, he would visit Ecolit. After X returned to Miami, I
reported my experience with Mr. Hamel to Mr. Lund and then to Mr.
Black and subsequently dictated a memorandum to Mr. Black
containing the same information. I maintained no activity logs
during my stay in Alaska because I was told by Mr. Black that none
of the usually required activity logs were to be maintained in

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connection with the Alaska trip.

Several days after my return to Miami, at the direction of Mr.
Black, I contacted Charles Hamel one or two times at the number Mr.
Hamel gave me on the airplane* The purpose of my phone call was
to attempt to arrange an introduction between Mr* Hamel and Wayne
Black (posing as Wayne Jenkins of the Ecolit Group) . Mr. Black was
present during my calls to Mr. Hamel and spoke with Mr. Hamel
himself once the introduction had been made. Subsequently, it is
my understanding that he made several additional phone calls to Mr.
Hamel. I witnessed approximately two of the calls made by Mr.
Black (Jenkins) to Mr. Hamel. I observed at least one of these
telephone calls being recorded by Mr. Black. The device used was
a wire with a suction cup attached to the receiver and the other
end attached to a small tape recorder on Mr. Black's desk. I know

other phone calls to Mr. Hamel were recorded because Mr. Black

played for me the tape of at least one of the phone calls which he
made to Mr. Hamel.

In the days immediately following my return to Miami, Wayne
Black arranged to establish an official Ecolit office in Miami, in
the Coconut Grove area. This was done because Mr. Hamel had stated
to me on the airplane that he would be coming to Miami and would
come by to see Ecolit Y s offices and get to know more about the
group. However, within a few weeks after my return, Mr. Hamel had
indicated that he would not be coming to Miami. Therefore, Mr.
Black determined that we would have to travel to Washington, D.C.

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Page Eight

in order for him to meat Mr. Hamel. At that point , Mr . Black
directed me to travel to Washington with him to make the
introduction. I did not really want to go, and I did not want to
be a part of any further deception of Mr. Hamel. In fact, on April.
30, 1990, I wrote a letter to Mr. Black explaining this and X have
provided that letter to this committee in response to the subpoena
served upon me. Nevertheless, after much discussion, Mr. Black
did succeed in convincing me to travel to Washington with him and
to introduce him (as Wayne Jenkins) to Mr. Hamel with the
understanding that I would not again be asked to have contact with
Mr. Hamel or to engage in any further deceit pertaining to Mr.
Hamel. X wrote Mr. Black an additional letter, on May 6, 1990,
which he received on Monday, May 7, 1990, confirming my earlier
statements to him that I was uncomfortable about my role in the
Hamel matter, that I was above my head in terms of my experience
as an investigator, and that I wanted no further contact with Hamel
or this case. X would add, however, that at this point in time,
May 6, 1990, I still had received no information from Wackenhut
regarding the identity of the client or the nature or purpose of
the operation. My letter of May 6, 1990 was provided to this
committee in response to the subpoena served upon me.

X arrived in Washington, with Wayne Black, on approximately
May 9, 1990. Mr. Hamel picked us up at a restaurant in downtown
Washington and drove us to his office. Wayne Black was introduced
as Wayne Jenkins of the Ecolit Group, and Mr. Hamel introduced Mr.

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Black and myself to several other persons present at Nr. Hamel's
offices. Mr. Hamel picked up his mail at his offices and placed
the mail and several other items, such as newspapers, in the back
seat of his car. He then drove us to his home in Alexandria,
Virginia. During the time we were riding to Mr. Hamel's home,
Wayne Black was seated in the back seat and I was seated in the
front passenger seat. At one point during our trip, I looked back
and observed Mr. Black going through Mr, Hamel's mail. I did not
see Mr. Black actually take any of the mail. After we arrived at
Mr. Hamel's home, Mr. Hamel took the mail and other items into his
home and placed them on his desk in the livingroom of his home.
Nearby, on the floor, were many other stacks of papers. Mr. Hamel
left the room twice while we were there. During each of his
absences, I observed Mr. Black leafing through Mr. Hamel's mail and
the numerous papers stacked on the floor. Mr. Black was very happy
about the opportunity to observe Mr. Hamel's mail and papers and
commented to that effect several times. I became extremely nervous
and apprehensive and very much regretted being there.

After a while, Mr. Hamel reappeared with his wife and we all
chatted for awhile, primarily about Ecolit. Mr. Hamel seemed quite
suspicious about Ecolit and asked many questions of Mr. Black.
After awhile, Mr. Hamel and his wife invited us to join them for
dinner at a nearby restaurant. Just prior to departing for dinner,
Mr. Black used the bathroom in the Hamel home. A short time later,
while walking to the restaurant with Mr. and Mrs. Hamel, Mr. Black

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quietly stated to me that he intended to tape the dinner
conversation. Specifically, he advised me not to talk too much so
that the tape would not contain too much unnecessary chatter.
Sometime after we reached the restaurant, Hr. Black went to the
restroom and after he returned he whispered that the tape had not
worked, that the conversation did not record. Based on this, I
concluded that Mr. Black had wired himself at the Hamel home and
attempted at the restaurant to tape the dinner conversation with
the Hamels.

After dinner, we walked back to the Hamel home and Mr. Hamel
drove Mr. Black and me around Alexandria and then to the airport.
On the flight back to Miami, Mr. Black removed from his brief case
two long envelopes, bearing metered postage, which he indicated he
had taken from Mr. Hamel, although Z cannot recall whether he
stated the items were taken from Mr. Hamel's car or his home. I
reacted with surprise and asked how he could have taken the items
and he responded that "they were stolen anyway" and that they did
not really belong to Mr. Hamel.

After returning to Miami, I discontinued all contact with Mr.
Hamel. I resigned Wackenhut on or about June 25, 1990. Between
the time of my return and my resignation, among other duties, I
continued to man the undercover Ecolit office and, on one occasion,
I was asked to — and did — examine trash which I was told had

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been taken from Mr. Hamel's residence. 1 resigned in writing and
my resignation letter has been provided to this committee in
response to the subpoena served upon me. I have had no further
contact with the investigation pertaining to Mr. Hamel, or with the
Wackenhut Corporation except in connection with these proceedings.

I hope that this information is helpful to the Committee and
I will be happy to try and answer

y questions which you may have.

RICKI SUE JACOE

SWORN TO AND SUBSCRIBED before me the day of

UfuAi/L' , 199$ in the County and State aforesaid.

323

TESTIMONY OF

ANA MARIA CONTRERAS

BEFORE THE

UNITED STATES HOUSE OF REPRESENTATIVES
OF THE UNITED STATES CONGRESS
COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

2226 Rayburn House Office Building
Washington, D.C.

329

My name is Adriana Caputi. I am submitting this statement to
the Committee for its consideration in connection with their
inquiry into the Wackenhut investigation of Charles Hamel.

I am a private investigator. I am currently unemployed. I
went to work at Riley, Black & Kiraly Associates around August,

1988. I was hired as an investigator. In the context of my
duties, I became acquainted with Mr. Wayne Black as he was one of
the partners of the firm.

In late 1988, Mr. Black left the firm of Riley, Black & Kiraly
to form his own company called Wayne Black & Associates. I
continued to work for Riley, Kiraly & Associates until April of

1989, when Mr. Black hired me to work for his investigation
company •

Sometime in mid 1989, while I was employed at Wayne Black &
Associates, negotiations began between Wackenhut and Wayne Black.
Black told me Wackenhut was a big move for him, and the cases we
were going to handle were going to be much better and bigger, and
that our salaries and benefits were going to be much better. He
continued to brag about the move to Wackenhut while arranging
meetings with Wackenhut officials outside of the office. Although
he did not identify specific cases or clients we would be working
on he made it clear that we would be working on "very big N cases.

In late September, 1989, Bill Shirley from Wackenhut came to
the Wayne Black & Associates office to assess the office property.
Soon after that, the employees of Wayne Black & Associates, which
were J. Thomas Whiteman, Anne li Osoria, Richard Lund, and myself.

330

joined the Wackenhut Corporation. I was officially employed on
October 2, 1989.

At Wackenhut, I was an investigator for SID. I did all types
of investigations, video surveillance, background investigations,
undercover work and interviews. I was a full time employee of The
Wackenhut Corporation from the time I was hired.

I was unaware of Case 427 until I overheard conversatio in the
office that Wayne Black, Richard Lund, Ricki Jacobsen, and Gary
Crep returned from Alaska. At the time everything was extremely
"hush-hush" in the office, and I did not know what the case was
about or who it involved. After the four parties returned to
Miami, I found out that it was a very big case that involved
Alyeska (at the time unknown to me who Alyeska was) and Exxon. I
knew no more about the investigation until Ana Contreras joined SID
in May, 1990.

Ana Contreras and Ricki Jacobsen would speak often, and Ricki
Jacobson would always complain about "427" to Ana. I would often
overhear them because of our sitting arrangements. Jacobsen would
say "I don't want to do this", "I'm tired of this" and would tell
Ana Contreras about things she did during investigation. But I did
not pay close attention to the specific details of what she was
saying .

When Ana Contreras started to work the case, things were more
freely discussed within the office and the names Alyeska, Exxon and
Hamel would come up quite often. I heard Ricki Jacobsen tell

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331

someone in the office about her ordeal in Alaska, how she had to
sit next to Hamel on the plane and was asked by Wayne Black and
Richard Lund to become "friendly" with him in the lounge of a hotel
in Alaska.

I recall that Ricki Jacobsen set up an office which was named
The Ecolit Group located at 2000 S. Dixie Highway, Suite H, Coconut
Grove, Florida. Ricki Jacobsen kept stating in the office that she
was in charge of getting the furniture, answering machine, the
phone hooked up, etc. Richard Lund created a pamphlet describing
what The Ecolit Group did. After Jacobsen left SID and Wackenhut,
Ana was in charge of The Ecolit Group office also known as the
undercover, or UC office.

Around the same time, Contreras began to have many
difficulties with Wayne Black because they disagreed about her
work. Contreras was instructed to take me to The Ecolit Group
office and show me what was there. Prior to Contreras' leaving,
she was to show me how to work the answering machine, become
familiar with what the Ecolit Group stood for (which was an ecology
litigation group) and to give me a pamphlet that was printed with
what The Ecolit Group did. The office included a two-seater couch,
a small desk, a chair, a telephone, an end table, an answering
machine, a couple of posters from Alaska, the pamphlets and
stationery with the name and address of The Ecolit Group. The
office was very small.

Ana Contreras advised me not to spend too much time in the

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332

office or make any phone calls because she believed there was a
hidden camera that was recording us constantly.

Following Contreras' departure from SID, I was instructed to
frequent The Ecolit office 3 or 4 times a week to pick up the mail,
which included telephone bills, long distance phone company bill
(MCI), and two subscriptions to newspapers, one being the Anchorage
Daily News and I do not recall the other one. Messages were to be
picked up from the answering machine on a daily basis, and a few
months later 3 to 4 times a day. The only messages received that
I picked up from the answering machine were those of Chuck Hamel
asking for Wayne (Jenkins) Black. When a message was picked up
from that answering machine, Wayne (Jenkins) Black was to be paged
immediately and given the full message from the answering machine.
The newspapers were to be taken back to the SID office and
thoroughly looked through locating any articles involving Hamel,
Alyeska, Exxon, or any other articles dealing with the oil
companies .

The case began to heat up in July, 1990, because we could not
find any definite proof where the "leaks" were coming from, and
therefore Wayne Black decided we needed to take a more direct
approach in order to identify the "leaks."

Around the beginning of August, 1990, an investigator by the
name of Sherree Rich joined SID. Sherree was to be the person who
ran the office that was being set up in the State of Virginia. I
met Sherree briefly when I was instructed to pick her up at the

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333

airport .

The week of August 5th, 1990, Wayne Black asked me and
investigator Victor Martin if either of us wanted to drive a
recreational vehicle from Miami to Virginia. I askdd what was in
the vehicle and was told it would be full of equipment. After
several discussions in the office, it was decided Victor would not
go to Virginia. It was decided that I would go and a second person
would accompany me to share the driving. At this time Mercedes
Cruz said that she would be willing to accompany me on the
expedition and share in the driving.

On Friday, August 10, Richard Lund and I went to Cruise
America where Rick Lund rented a large RV for a period of a month.
The vehicle was paid with Rick Lund's American Express card. I
drove the RV back to Wackenhut and parked it at a parking meter
where Rick Lund and Vernon Johnson proceeded to load the RV with
extremely expensive and sensitive equipment, such as an IBM
computer still in the original box, tools, a duffle bag containing
a camera hidden in a ceiling sprinkler head, 2 -way radios and a
portable phone.

The information I was supplied with was that the RV was going
to be set up as a surveillance vehicle with Vernon Johnson
monitoring the equipment. I was advised that the equipment was
extremely expensive and we were not to leave it alone for so much
as a minute.

We were also issued a memo which we were to give a law

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334

enforcement officer if questioned regarding the equipment. Cruz
and I were to tell the law enforcement officer he should contact
Wayne Black for additional information.

Wayne Black also gave Mercedes Cruz and I a letter which
stated "...that the Wackenhut Corporation is duly licensed to
conduct investigations in Florida and Virginia. . .because of the
reciprocity agreement between Florida and the Commonwealth of
Virginia." The letter also said that he would "continue to
maintain a close working relationship with Federal, State and local
authorities in terms of cooperation without violating disclosure
laws or confidentiality agreements." An assignment memo typed by
Wayne Black himself on August 10, 1990, said "You are responsible
to transport the camper and equipment to Rick in Virginia. No one
may know why or what you are doing. Please advise Mercy."

Ms. Cruz and I arrived at the Crystal City Marriott where
reservations had been made for us. We arrived at the hotel at
approximately 6:00 p.m. on August 11th. The RV was unloaded by the
bellboy and one of us stayed with the RV and the other proceeded to
the room with the bellboy and the equipment. We put as much of the
equipment as we could in the closet of the hotel room. From when
we left Miami at approximately 5:30 p.m. on August 10th, we
continuously checked in to dispatch at the Wackenhut Corp.

I was instructed to remain at the hotel until Rick Lund and
Vernon Johnson joined me. Mercedes Cruz left Washington in the
late evening on Sunday, August 12th. That same evening Vernon

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335

Johnson and Rick Lund arrived at the hotel. Both proceeded to move
the equipment from my room to where Vernon Johnson was going to set
up the computer. I am uncertain at this time if that was his room
or the Ecolit office in Virginia. I flew back to Miami on the 14th
or 15th of August.

Approximately a week or two later, Wayne Black, Rick Lund, and
I flew back to Washington, D.C. I was briefed about a meeting at
The Ecolit office that was going to take place between Chuck Hamel,
Wayne Black, Sherree Rich and myself. I was instructed not to say
more than my name, greetings, and that I did research for case
preparation. Rich and I were instructed to sit in certain chairs,
not to block the view of the camera hidden in a radio which was to
record Chuck Hamel. Sherree Rich had been instructed to put the
latest editions of the Anchorage paper in a noticeable place so
that it looked to Hamel like the papers were being read. We waited
in the office until Hamel arrived.

At that time as seen on the video, Wayne Black introduced me
by my legal name, Adriana Caputi, to Chuck Hamel. Hamel commented
about my name being Caputi, Italian, and asked me where I was
originally from. We all took our seats and Wayne Black started to
talk to Hamel about things that Wayne was doing to move things
along. A dummy complaint was prepared by SID to show Hamel that
Ecolit was active in litigation. Wayne continued to tell Hamel how
well things were going, and mentioned that I was doing work for the
law firm of Goodman & Goodman. Shortly thereafter Wayne Black

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336

asked Sherree Rich and myself to leave. Sherree Rich and I
proceeded to a bagel shop at the mall to await a page that Wayne
Black was going to send Rich when we were both to return to the
office. When Rich was paged we both returned to the office and
then left with Wayne Black in a rented blue Cadillac.

While I was in Virginia with Sherree Rich, Rick Lund and Wayne
Black, Wayne talked about how they had used a remote controlled toy
vehicle, which they ingeniously, quietly and without the knowledge
of the Navy intelligence personnel who occupied the surrounding
offices, had run wires from the International Overseas Trading
suite over the two intervening offices and into the Ecolit Group
Office. This was done to set up the video and audio equipment in
the Ecolit office and monitor such from the International Overseas
Trading office. The wires were attached to the toy vehicle, a
panel of the drop ceiling was pushed up, the vehicle was put into
the ceiling - and using a hand held steering device the toy was
driven from one office to the other and brought down from the
ceiling into the Ecolit office.

On August 20th we had a lunch meeting with Wayne Black, Dale
Matthews, Janet Lago, Mercedes Cruz and myself which was held in an
Italian Restaurant at the Bakery Center in Miami. During this
luncheon various procedures were talked about since Dale Matthews
had just joined the SID office. I was instructed to immediately
after lunch take Cruz and Matthews to the Ecolit office in Miami
and brief them on what needed to be done. Matthews drove Cruz and

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337

I to the Ecolit Group office where I showed them where the mail was
to be picked up, and the location of the office.

I also advised both that the rent was to be paid in cash or
money order to the receptionist and the phone bill and MCI bill
were to be sent by mail. These were things that I had been doing
after Ana Contreras left SID. Wayne Black stated that we needed to
find a way that Chuck Hamel would not be talking to an answering
machine every time he called in because he could become suspicious.
On or about August 20th, 1990, I spoke to the receptionist where
The Ecolit office suite was located and asked if they could answer
our phone. The lady replied that it would be no problem but that
a telephone line had to be hooked up to her switchboard. This was
done and thereafter when anyone called The Ecolit office the
receptionist would answer Ecolit Group. She was given a list of
names and beeper (pager) numbers including Wayne Jenkins, John Fox
(Rick Lund), myself, Mercedes Cruz and Dale Matthews. When someone
called The Ecolit office, the receptionist was to page people in
that order and await a quick response.

Sometime after this, a big meeting was scheduled between Wayne
Black, Richard Lund, attorneys and security people from Alyeska.
Throughout the preparations for this meeting, equipment had been
set up in the office to duplicate video tapes and audio tapes
obtained throughout the investigation. There were also a couple of
temporary employees who were transcribing at the time. One of the

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338

persons transcribing was well known to me because she had
previously been Wayne Black's secretary at Wackenhut and at Wayne
Black & Associates. This individual was Anneli Osoria. Ms. Osoria
would come in the evenings and transcribe. One of the SID
secretaries named Cindy Valdez was also transcribing video tapes.

Wayne Black rented a Lincoln Town Car because he was going to
be driving people who were coming to this meeting. Janet Lago (SID
secretary) and myself were instructed to purchase luncheon trays.
Janet and I proceeded to the penthouse conference room where, with
the help of a maintenance lady, we set up the food, drinks, etc.
for the meeting.

In the afternoon I was instructed by Wayne Black to proceed to
the conference room where I was introduced to four men, one of
which was Pat Wellington of Alyeska. I cannot recall the names of
the other three men but I do remember at least one was an attorney.
Also present in the conference room were Rick Lund, William Richie,
Esquire, and Jonathan Goodman from the law firm Richie, Munroe,
Fine & Goodman, P.A. I was instructed by Wayne Black to drive the
out of town visitors back to their hotel in Miami which was near
the Omni. The out of town attorney had a flight to catch shortly
after the meeting and I proceeded to drive him to the airport.

Although the case continued, I had no further involvement but
for two exceptions. One exception was when I was questioned by two
attorneys, a male and a female, and Wayne Black instructed me to
answer them briefly. The questions that I recall were: when did

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339

I start working for Wackenhut; was I an investigator; and what did
I do at the Ecolit office?

I overheard conversations about the involvement of Congressman
Miller and how he had become a target of the investigation.

At one time further into the investigation Hamel had called
irate several times because he was not getting a return call from
anyone, so the receptionist gave him my pager number. Hamel then
paged me directly from another state, possibly Washington, I
returned the phone call not knowing who had paged me and found out
that it was Chuck Hamel. Hamel stated that he was extremely upset
and that he needed to talk to Wayne Jenkins immediately. Then
proceeded to ask me if Mr. Trump was there. My response was "Mr.
Trump?" And Hamel said, "Yes, isn't Donald Trump on the Board of
Directors?" I told Hamel that I would immediately relate the
message to Mr. Jenkins when I located him. I went into Black's
office and told him what had happened.

Black instructed me never again to contact Hamel, to dictate
a quick memo and he would take care of it immediately. I then
asked Wayne what was this about Trump. Wayne replied that "Yea, we
told Hamel that Trump was on the Board of Directors and he believed
it. "

I did not receive any other calls from Chuck Hamel; however,
I did relate messages to Wayne of calls that Hamel made to The
Ecolit office.

The second exception was hearing the other investigators and

- 12 -

340

my direct supervisor Gilfredo Mugarra talk about the billing and
the case, especially to Rafael Castillo. All 427 files, notes,
reports, receipts and billing were kept in a file cabinet, that was
a locked safe in a filing room at SID. Most of the SID case files
were kept in the same room, but in regular filing cabinets. The
combination to the safe file cabinet was only known to Wayne Black,
Richard Lund, and at that time to Wayne Black's secretary Janet
Lago. Janet Lago said that when John Mann, Deputy Director for
SID, demoted her to "girl f riday" the combination was changed and
was only available to Wayne Black, Rick Lund, John Mann, Patricia
Cowley and Wayne Black's private secretary Mercedes Equizabal.
Gilfredo Mugarra bragged that he also had the combination to his
safe.

Wayne was a prolific memo writer. Any and all information
regarding a case was to be dictated and submitted to the
secretaries who would then proceed to type the memos. After the
secretaries typed the investigator 1 s memo, she would make a copy

and give it to the investigator for corrections. The original was
given to Wayne Black. Following the investigator completing all
corrections, the memo was returned to Wayne for approval to
finalize. All memos were kept in each case file.

Gilfredo Mugarra spoke often to other investigators about John
Mann's inability to do his job properly and his lack of knowledge
of the investigative field. Mugarra talked behind people's back,
and would say that he would always stick with Wayne Black because

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341

Wayne Black was "bullet proof."

On April 22, 1991, I was given a final notice before
termination of employment and an eight hour suspension because of
false allegations made about my character, and work performance.
I was also told that Gilfredo Mugarra had said he was glad my days
at the Wackenhut Corporation were "counted" and that I was going to
"be fired."

Because I was afraid of being terminated for no legitimate
reason, I felt pressured to resign and give the customary two weeks
notice. However, I was asked by Gil Mugarra to leave immediately
and he escorted me out of the building.

In August, 1991, I was contacted by Mr. Hamel's attorney. I
agreed to give this information to Congressional investigators and
did so.

I have been given nothing of value for this statement, and
give it freely without any threats or coercion.

342

343

FINANCIAL HIGHLIGHTS

(Dollars In Thousands Except Per Share Data)

Percent

1990 1989 Change

Revenues $ 521,191 $462,181 +12.8

Net Income $ 6,963 $ 5,874 +18.5

Return on Average

Shareholders’ Interest 19 . 5 % 18.3%

Per Share of Common Stock:

Net Income $ 1.80 $1.52

Cash Dividends $ .60 $ .60

Shareholders' Interest $ 9.81 $8.71

Average Shares

Outstanding 3 , 858,885 3.858,885

THE WACKENHUT CORPORATION

Corporate Vision:

By the year 2000, The Wackenhut Corporation will be recognized

throughout the world as a uniquely diversified, superior performing

and profitable protective and support services company.

Operating and Financial Goals:

The Wackenhut Corporation will:

• Conduct all Corporate relationships according to the highest
moral and ethical standards.

• Increase earnings per share and shareholder value on a con-
tinuing basis.

• Attract and retain a skilled work force, using only the highest
standards in the recruitment and selection of personnel.

• Increase the productivity and professionalism of personnel at all
levels within the organization, by emphasizing sound initial and
ongoing training.

• Respect the dignity, rights and contributions of its employees.

• Maintain Return on Equity (ROE) at consistently high levels.

• Develop and retain a prestigious client base, including companies
listed on the Fortune 500 and important agencies within Federal,
state and local governments.

• Seek long term relationships with our clients, based upon quality
of service, not lowest price.

• Establish and maintain a mechanism for identifying and satisfying
real customer needs through a total Corporate quality improve-
ment program.

• Continue to improve the quality of Corporate services, to internal
as well as external customers.

• Develop and achieve meaningful market share goals for each
Business Unit.

• Continue to diversify into areas that will maximize profits and cash
flow, and/or improve market penetration.

• Develop a balanced plan of short, medium and long term interests
while achieving sustained, profitable growth.

A COMMITMENT TO EXCELLENCE

345

TABLE OF CONTENTS

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Principal Operating Groups

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Government Services

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FINANCIAL REVIEW
Notice of Annual Meeting

346

LETTER TO THE SHAREHOLDERS

The Corporation's annual
report for the year 1990
contains a number of
highlights which speak
rather strongly for the
excellent financial condition
of the Company at the
close of the year: record
sales, exceeding the half
billion dollar level, accom-
panied by record earnings,
and a return on average
shareholders’ interest of
19.5 percent. This marks
the thirty-sixth straight year
of increased revenues.

Through the last decade,
the Corporation developed,
and then closely monitored,
a definitive Corporate plan which emphasized
improvement in the quality of our services and
diversification into logically related areas. As a
result, the Corporation initiated services to support
the construction and management of correctional
facilities; the administration of education, training
and vo-tech programs; and institutional food and
health services. Present Corporate plans are to
consolidate these expansionary efforts, improve
margins, and achieve a sustained and profitable
growth pattern that will establish The Wackenhut
Corporation as a uniquely diversified, superior
performing and profitable provider of business,
industrial and professional services.

An unexpected call to our government services
subsidiary, Wackenhut Services, Inc. (W.S.I.),
during July of the past year indicated that the
Corporation has achieved a significant measure of
success in being recognized as a leading and
dependable provider of quality services to the
Federal Government. The Department of Energy
(D.O.E.) decided to make an immediate change in

the management of
security at its Rocky Flats,
Colorado, nuclear manu-
facturing facility. Circum-
stances eliminated the
opportunity for the normal,
but time-consuming,
competitive bidding
process, and Department
officials contacted WSI with
an invitation to assume
contract responsibility at
this critically important
location. In a matter of
days, W.S.I. had a man-
agement team in place to
operate under an interim
contract, and began
negotiating a two-year
contract which is now in
place and will generate additional annual revenues
of approximately $35 million for the Corporation.

While appreciative of the confidence shown in the
Corporation’s management by the Department of
Energy at that time, we also feel that our selection
demonstrated a tangible recognition of Wackenhut’s
commitment to excellence and its quality contract
performance at other D.O.E. sites.

Accolades were also earned by the Nuclear
Security Division's contract security force at the
Florida Power and Light Company, as it was
formally awarded "Certified Quality Supplier"
status. Developing the programs and structure
necessary to achieve this honor required serious
commitment inasmuch as Florida Power and
Light was the first company outside of Japan to
receive the prestigious Deming Prize for quality
performance.

In the 1990’s, we will continue our innovative efforts
toward overall quality improvement in those

Richard R Wackenhut and George R Wackenhut

347

services provided to our worldwide list of clients.
Our operating philosophy will continue to empha-
size the highest standards in the recruitment and
selection of personnel; recognition of the contribu-
tions of our work force of over 41 ,000 employees,
including our international subsidiaries and
affiliates; and a determination to retain long-term
relationships with our prestigious client base.

As we progress into the next decade, the Corpora-
tion will not overlook possibilities for further diversi-
fication, particularly those enterprises that will
contribute to profits and cash flow, improve market
penetration, or enhance our long-range potential.

The Corporation takes a great deal of pride in its
participation in a number of projects in addition to
Rocky Flats, as mentioned above, which are
closely related to our national defense interests.
They include the Wackenhut personnel who con-
duct security operations at the trans-Alaska Pipe-
line, the Strategic Petroleum Reserve Operations,
the Nevada Test Site, the Savannah River Site and
in the protection of U.S. Missions and Embassies
overseas. We have equal pride in those Wackenhut
employees who have been called up with their
respective Armed Forces Reserve Units for service
related to the Persian Gulf operations, and offer
them and their families our strong endorsement
and best wishes.

We are appreciative that the Corporation has a
highly capable and innovative senior management
team, and to them goes much of the credit for our
successful record. Since the publication of our last
annual report, there has been only one change in
our roster of key corporate executives. G. Calvin
Harris, who had been the Chief Financial Officer
since August, 1979, retired, and taking his place is
Michael A. DiGregorio, who was elected to the
position of Senior Vice President, Finance,

Treasurer and Chief Financial Officer at the October
meeting of the Board of Directors.

Appreciation also goes to our highly distinguished

Board of Directors for the oversight they have
provided during the Corporate planning and devel-
opment process and in determining the future
direction of the Corporation. Our gratitude is also
extended to our shareholders for the confidence
demonstrated in our Company, and we pledge to
you a satisfactory return on investment as we
continue beyond the accomplishments of our 36th
year. The half-billion dollar achievement of this past
year is but one more benchmark as we strive
forward on a progressive and well-managed path
of growth and expansion.

Sincerely.

y George R. Wackenhut

Chairman of the Board and
Chief Executive Officer

Richard R. Wackenhut

President and Chief Operating Officer

348

5 YEAR PERFORMANCE INDICATORS

Revenues Net Income After Tax

'86 87 88 89 90 ‘86 87 88 89 90

REVENUES OF MAJOR OPERATING GROUPS

1 990 compared to 1989 (in rmNons oi dollars)

DOMESTIC OPERATIONS .

including Siena* Systems. Inc 1990

1989 ■■■■■■■■■■■■■■■■■

GOVERNMENT SERVICES

including WATC. Inc 1 990

1989

INTERNATIONAL OPERATIONS

including Puerto Rico oper ations 1 990

1989

131

349

SENIOR
OFFICERS
OF THE

CORPORATION

George R. Wackenhut
Chairman of the Board
and Chief Executive
Officer

Richard R. Wackenhut
President and Chief
Operating Officer

Ruth J. Wackenhut
Secretary of the
Corporation

PRINCIPAL

OPERATING

GROUPS

DOMESTIC OPERATIONS

Physical security services, investigations,
custom protection officers, nuclear security
and health services, emergency and support
services, airline services, and Stellar Systems,
Inc.

GOVERNMENT SERVICES

Diversified security related services by
Wackenhut Services, Inc.; and specialized
services by. Wackenhut Corrections Corpora-
tion, and Wackenhut Applied Technologies
Center, Inc.

INTERNATIONAL OPERATIONS

Security and security related services includ-
ing technical assistance in over forty countries,
on six continents, for both government and
commercial clients.

CORPORATE SENIOR VICE PRESIDENTS

Alan B Bernstein
Senior Vice President,
Domestic Operations

Fernando Carrizosa
Senior Vice President,
International Operations

Timothy P Cole
Senior Vice President.
Government Services

Michael A DiGregorio Robert C. Kneip

Senior Vice President, Senior Vice President,

Finance, Treasurer and Corporate Planning

Chief Financial Officer

350

Corporation’s Domestic
Services Expanded,
Improved During 1990

Quality improvements in the physical
security and investigative services, as well as
product expansion in the Corporation's
manufacturing subsidiary represented sig-
nificant achievements for the Domestic
Operations Group in the past year. It also
developed new services to satisfy the
increasingly sophisticated needs of today's
business and corporate entities for security
related services.

The Custom Protection Division initiated
physical security services for the rapid
transit public transportation system of Dade
County-Miami. Florida, in January. The
placement of over 130 specially trained,
highly qualified Custom Protection Officers
on the line resulted in a significant increase
in revenues for the municipal agency, as well
as a reduction of crime and adverse inci-
dents. The project stands as a model for the
introduction of this service to other urban
transportation systems throughout the
country.

Arkansas One. a nuclear power generat-
ing plant near Russellville. Arkansas,
became the latest major utility client to
contract with Wackenhut's Nuclear Services
Division for security related services,
bringing the total number of such contract
sites nationwide to thirteen. Wackenhut's
Nuclear Services Division team operating
with the Florida Power and Light Company
was formally recognized as a “Quality
Supplier" for its commitment to the prin-
ciples of continuous quality improvement
and customer satisfaction. The award was
sequential to FP&L's recent receipt of the
highly prestigious Deming Award for its
Quality Improvement programs.

Investigative services experienced an in-
crease in its volume of background investi-
gations conducted for corporate and business
clients, public utilities, and government
agencies. The Special Investigations Divi-
sion. organized early in the year, expanded
the Corporation's capability to serve the
financial business community, and intro-
duced the “Banking Compliance Initiative
Program” as a proactive due diligence pro-
cedure for financial institutions.

Stellar Systems. Inc., acquired a line of
alarm annunciators and monitoring products
early in the year, resulting in additional
applications of its varied perimeter security
products and systems.

The Domestic Operations Group also
continued the development of its diversified
activities, such as food and support services,
travel services, radiological health services
and consultations on crisis management.

352

DOMESTIC OPERATIONS

The Division's Banking Compliance Initiative Program
assists financial institutions in meeting the new and
enhanced due diligence responsibilities created by
recent court decisions regarding collateral and deposit
reliability, as well as governmental enforcement actions
and regulatory review procedures which now affect the
banking industry.

The executive protection services of the Corporation are
extended not only through the highly professional
Wackenhut specialists in this area, but also to the
training of individual members of an interested
company’s security staff, to include weapons familiar-
ization, tactical procedures and high speed driving
techniques.

Security related service to the nuclear power generat-
ing industry is a particular specialty for which the
Corporation has an excellent reputation and record of
performance. Typically, the NUCLEAR SERVICES
DIVISION security programs include priority attention to
the Quality Assurance program which is established at
each site. During the past year, the Corporation was
presented the "Quality Supplier Award” by the Florida
Power and Light Company, which was the first
American company to earn Japan’s Deming Award, the
world’s most prestigious recognition for quality perfor-
mance and improvement.

The expanding number of major utility clients who have
entrusted security and/or fire watch operations to
Wackenhut’s Nuclear Services Division is testimony to
its reputation for excellence:

Maritime security, vulnerability assessments, risk
analyses, crisis management training and operations,
eavesdropping countermeasures and covert video
surveillance are also among the extremely diverse
capabilities of The Wackenhut Corporation in the
domestic market. The Corporation’s International Risk
Forecast, a real time, computer based source of
information and analysis for eighty different countries, is
also available to the domestic commercial market. The
Domestic Operations Group also includes SECURE
TRAVEL SERVICES, INC., which draws on the assets
of the Corporation's security capabilities as a value-
added service to corporate and business travellers.

ARKANSAS

CALIFORNIA

FLORIDA

LOUISIANA
MASSACHUSETTS -
MISSISSIPPI
NEBRASKA
NEW JERSEY

NEW YORK

SOUTH CAROLINA -
TEXAS

Arkansas Nuclear One, Russellville
Rancho Seco Nuclear Generating
Station

Plant St. Lucie

Plant Turkey Point

Waterford 3 Steam Electric Station

Pilgrim Nuclear Power Station

Grand Gulf Nuclear Station

Fort Calhoun Nuclear Station

Salem and Hope Creek Generating

Stations

Robert Ginna Nuclear Power Plant
Indian Point Nuclear Generating
Station

Virgil C. Summer Nuclear Station
South Texas Project

uimt

353

DOMESTIC OPERATIONS

Services to the nuclear industry also include nuclear
technicians and specialists in radiological support
services, including health physics, radiation protection,
environmental programs, and emergency prepared-
ness planning and training.

Through its SUPPORT SERVICES DIVISION, the
Corporation’s physical security capabilities also extend
to the protection of personnel and property during plant
emergencies, labor-management disputes and natural

disasters. Security personnel and operational staff are
available on short notice to any plant or facility, or
network of such sites, through the use of Wackenhut's
nationwide assets. The Support Services Division can
also provide on-site food preparation through the use of
its mobile kitchen equipment, pre-positioned at regional
support centers, and can supply linens, cots and
recreational items. The capabilities of the Support
Services Division have been expanded to include
longer term food service to a wide range of institutional
settings with full management and oversight by the
Corporation’s professional staff of dieticians and skilled
administrators.

The professionalism of Wackenhut’s security related
services is also well known to the sports and entertain-
ment industry because of its presence at convention
centers, sporting events, racetracks, and auditoriums.
WACKENHUT SPORTS AUTHORITY, INC. can provide
security planning and risk assessment as well as
security personnel to planners of events which draw
large audiences, and can also support them with crowd
control measures, ticket attendants and ushers.

WACKENHUT AIRLINE SERVICES, INC., is a
Corporate subsidiary with a presence at over 100
airports, providing security services and predeparture
screening of passengers in accordance with the
standards of the FAA and major international carriers.
The Wackenhut Corporation’s service to the airline
industry extends to its operation in the Far East, Central
and South America and Europe and includes risk

354

domestic: operations

assessments and cargo area security measures.
Baggage service and claim operations can also be
provided by the same management group.

The Domestic Operations Group includes the subsidiar-
ies, AMERICAN GUARD AND ALERT, INC., which
protects the 800-mile trans-Alaska oil pipeline, and
WACKENHUT OF ALASKA, INC., which provides
security at the North Slope oil fields, and other indus-
trial and business concerns in our northernmost State.

STELLAR SYSTEMS, INC., the world's technical leader
and major supplier of outdoor perimeter security
products, is another key part of the Domestic Opera-
tions Group. It can satisfy the full range of above-
ground and below-ground perimeter protection
requirements for defense installations, correctional
sites, nuclear power generating facilities and high risk
industrial complexes. Central to Quality Control for
Stellar Systems is its environmental test site in Santa
Clara. California, where all Stellar products are oper-
ated and monitored under outdoor conditions, 24
hours-per-day, year round. It is also used for product
development and equipment evaluation, and is aug-
mented by independent test facilities in other parts of
the country to insure exposure to all possible environ-
mental conditions.

Due to a recent acquisition, a new line of alarm monitor-
ing products now complement the Stellar MARS family
of multiplexed alarm reporting systems first introduced
in 1980, and the Miniplex III system introduced in 1989.

The operations and product lines of Stellar Systems,

Inc. contribute to the worldwide reputation of The
Wackenhut Corporation for Total Security programs and
for Quality Service and Professionalism in the security
industry.

355

IX Wit.." Ik: OPHRATIONS

DOMESTIC OFFICES

The services of the Domestic Operations Group may be arranged through area/branch offices of the Corporation
located in the following cities:

Alaska

Anchorage

Arizona

Phoenix

California
Los Angeles
West Los Angeles
Colton
San Diego
San Francisco

Colorado

Denver

Connecticut

Hartford

District of
Columbia
Washington

Florida
Boca Raton

Bonita Springs

Ft. Lauderdale

Ft. Myers

Jacksonville

Lakeland

Miami

Orlando

Panama City

Pensacola

Sarasota

Tampa

West Palm Beach

Georgia

Atlanta

Columbus

Hawaii

Hilo

Honolulu

Maui

Illinois

Bloomington

Chicago

Indiana

Indianapolis

Kentucky

Ashland

Lexington

Louisville

Louisiana
New Orleans

Maryland

Baltimore

Massachusetts

Boston

Worcester

Michigan

Detroit

Mississippi

Jackson

Missouri
Kansas City

New Jersey
Atlantic City
Newark
Somerset

New Mexico
Albuquerque

New York
Buffalo
Long Island
New York City
Schenectady

North Carolina

Asheville

Charlotte

Greensboro

Raleigh

Ohio

Cincinnati

Cleveland

Columbus

Toledo

Oklahoma
Oklahoma City
Tulsa

Oregon

Portland

Pennsylvania

Erie

Philadelphia

Pittsburgh

Rhode Island
Providence

South Carolina
Columbia

Tennessee

Memphis

Nashville

Texas

Austin

Beaumont

Dallas/Fort Worth
Harlingen
Houston
Longview
San Antonio

Utah

Salt Lake City

Virginia

Harrisonburg

Norfolk

Richmond

Roanoke

Washington

Seattle

West Virginia
Charleston

Wyoming

Casper

Gillette

356

New Government
Contracts Add To
Corporation’s Growth

The assumption of a new $35 million
Department of Energy security services
contract at Rocky Flats. Colorado: new -
contracts to provide correctional services to
slate and municipal agencies; and the
renewal of four major federal contracts
highlighted a year of continued growth for
the Corporation's government services
business.

Wackenhut Services. Inc. was contacted
by the U.S. Department of Energy in July.
1990. in regard to the assumption of security
responsibilities, on short notice, at the
Department s Rocky Flats nuclear
manufacturing facility, one of several plants
in the United States that performs an
essential part of the nuclear weapons
production process for national defense.
Wackenhut Services, Inc. initiated contract
security services at the site in August. 1990.

Wackenhut Corrections Corporation
experienced a revenue increase from $19
million in 1989 to approximately $34
million by the close of 1 990. Its first venture
into the operation of a state medium security
prison took place in November, with the
opening of the Allen Correctional Center
under a contract with the Louisiana
Department of Safety and Corrections. It is
a 600 inmate facility on 55 acres of land.

with a capability for cxpunsion to a 1.200
bed capacity.

Wackenhut Corrections was selected
during 1990 to design, build and operate a
500-bed work facility prison in Lockhart.
Texas. Construction is expected to be
completed in 1991. and its operation will
feature a cooperative job training effort with
private industry.

Wackenhut Health Services. Inc., which
provides health care services to all W.C.C.
correctional facilities, was awarded contracts
during the past year to also provide health
care services to publicly operated
correctional sites in Boston. Massachusetts;
Naples. Florida; and Akron. Ohio.

After a competitive bidding process, the
U.S. Department of Labor awarded a follow -
on contract to Wackenhut Services. Inc.

( W.S.I. ) to continue to operate the Job Corps
Center in Guthrie. Oklahoma, which it has
managed since July. 1985. In May. 1990.
W.S.I. renewed its contract to manage and
staff the U.S. Department of Energy's
Central Training Academy in Albuquerque.
New Mexico. Other competitive wins during
the year included plant security and fire
protection at the U.S. Army's Lake City
Army Ammunition Plant in Independence.
Missouri; and Holston Army Ammunition
Plant in Kingsport. Tennessee.

357

GOVERNMENT

ERVICES

WACKENHUT SERVICES, INC.
(W.S.I.) is the principal arm of
The Wackenhut Corporation in
providing a wide range of
services to state, county and
municipal governments, as
well as various agencies of the
U.S. Federal Government.

W.S.I. is in the forefront of the
Corporation’s efforts to offer
considerable savings to
government agencies through
the private operation of many
functions which have tradition-
ally been performed by public
employees. Wackenhut has
extensive experience in such
diversified areas as fire protection and emergency
medical services, crash-fire-rescue operations at
airports, police support duties in security of court-
houses and other government/municipal facilities,
comprehensive operations and management services,
and training of special police units and proprietary
security teams.

sites in a matter of days to
assemble a pre-cleared
management team to under-
take the responsibilities of a
complex security task.

The largest of W.S.I. ’s con-
tracts with the Department of
Energy is for security services
at the Savannah River Site,
near Aiken, South Carolina.
This 300-square mile facility
produces plutonium and
tritium for our nation’s nuclear
arsenal, and is also the site of
a naval fuels production
facility and a nuclear waste
processing plant. Services
provided by W.S.I. include an armed and uniformed
protective force, traffic and access control, law en-
forcement, investigations, sabotage prevention and the
monitoring of sophisticated alarm equipment. The 800-
person protective force includes a canine section,
helicopter support and a Special Response Team for
emergency situations or disruptive actions.

Government clients who have chosen Wackenhut on
the basis of its professional capabilities have also
achieved a significant cost saving for the public
agency. W.S.I. is well positioned to respond to the
steadily increasing trend toward the privatization of
government services.

After W.S.I. 's selection in 1990 to provide security
services at the Department of Energy’s nuclear
manufacturing site at Rocky Flats, near Denver,
Colorado, the Corporation is now contracted for
security-related services at five major U.S.
Department of Energy sites throughout the country.
Wackenhut responsibilities at the site include the
safeguarding of special nuclear materials, tactical
response teams, alarm monitoring, traffic enforcement,
and related administrative and maintenance respon-
sibilities.

In complying with the government’s request for services
on short notice at Rocky Flats, W.S.I. demonstrated its
unique ability to garner resources and key personnel
from the Corporate headquarters and other contract

W.S.I. is a subcontractor of Boeing Petroleum
Services in providing protective services at the
U.S. Department of Energy’s Strategic Petroleum
Reserve (S.P.R.) facilities located at seven field sites in
southern Louisiana and eastern Texas. The petroleum
reserves, stored in underground salt caverns, are
essential to the nation’s military and economic interests
and are secured by a protective force of approximately
300 uniformed officers. W.S.I. also provides contin-
gency planning, and Special Response Teams, and a
training program specifically tailored to the S.P.R.
mission.

The U. S. Department of Energy’s Nevada Test Site,
where explosive nuclear devices undergo live testing,
has been under the umbrella of W.S.I. 's contract
protective services since 1965. The security force at
this facility is equipped with helicopters and armored
vehicles capable of crossing the vast areas of rough
terrain at the 1 ,350 square mile site. The Security
Officers are skilled in tactical operations, as well as the
intricacies of crowd control during demonstrations
which occur periodically.

358

CKWERNMENT SERVICES

Wackenhut Services, Inc., has operated the Depart-
ment of Energy's Central Training Academy located on
Kirtland Air Force Base in Albuquerque, New Mexico,
since its establishment in 1984 With a faculty and staff
of over 75 specially selected and highly qualified
individuals and an adjunct faculty of additional profes-
sionals in specialized disciplines, the Academy pro-
vides training to personnel from Department of Energy
facilities across the United States. The safeguards and
security related courses include special response team
tactics, crisis negotiations, crisis management, super-
visor and instructor certification, firearms training and
management development.

Both fire and security sc r vices are provided by W.S.I. at
United States Army ammunition plants located at
Kingsport, Tennessee, and Independence, Missouri.
Wackenhut's security services are also in place at the
U S. Public Health Service's Parklawn Complex in
Washington, D.C.. and the Knolls Atomic Power
Laboratory’s Windsor Site Operations in Windsor,
Connecticut. The quality of service at each of these
major sites, as well as client satisfaction, is monitored
closely by the experienced staff; and wide ranging
corporate, legal and contract management resources
are available for further support from the Corporation's
headquarters.

Wackenhut’s operation of the Guthrie, Oklahoma.

Job Corps Center for the U S. Department of Labor
includes comprehensive operations and management
services for this sizable government complex. The

privatized federal project provides a comprehensive
vocational environment in a residential setting with
vocational and basic educational programs for disad-
vantaged youths. With a staff of almost 200, W.S.I. has
management responsibility for administration of these
programs for up to 630 resident participants at any
given time, as well as administrative, medical and
recreational services, counseling, job placement,
security, maintenance and other facility support
services.

Wackenhut Services. Inc., has certain programs and
organizations which are unique to the Wackenhut
organization and firmly establish a breadth of services
which differentiate the Corporation from other major
companies which provide security related services.
These special segments of W.S.I. include the
Integrated Training Resources Division, the Interna-
tional Risk Forecast service, and the Maritime Security
Division. Each of these entities crosses the boundary

NEVADA TEST SITE
i DEPARTMENT OF ENERGY

359

(JOVKRNMENT SHRVK :i:S

between the Corporation’s government and commercial
client base, since their service offerings are in a
position of increasing demand in both sectors.

Integrated Training Resources (I.T.R.) is located in New
Mexico and offers security related training and instruc-
tion to government and commercial clients. Through an
arrangement with the University of New Mexico, it
awards continuing education credits for many of its
courses of instruction, whether offered at the I.T.R.
location or by one of its mobile training teams at a client
location. A highly qualified full-time and adjunct faculty
provides tactical training, instruction in firearms and
high speed driving techniques, crisis negotiations and
response, instructor certification, force-on-force
engagement simulation systems, and other related
specialty training.

The International Risk Forecast is an electronic data-
base which forwards timely and detailed intelligence to
worldwide and multinational clients. It provides alerts of
terrorist, political and criminal developments in 80
countries and analyzes how they may affect businesses
and individuals operating or traveling overseas. The
information is gathered from a variety of sources
including the Corporation’s network of international
offices and is then analyzed by the I.R.F. staff and
placed into the database.

The Maritime Security Division is the only one of its kind
in the security industry and demonstrates the
Corporation’s lead in recognizing the potential for

maritime terrorism, smuggling, extortion and piracy.
Besides providing U.S. Customs Carrier Initiatives
assistance, the Division also offers worldwide maritime
investigative services, supplementing of shipboard or
shoreside security personnel, perimeter security and
access control systems, and individualized security
assessments of private and commercial seagoing vessels.

WACKENHUT APPLIED TECHNOLOGIES CENTER, INC.

(WATC) based in Northern Virginia, near Washington,
D.C., is the Corporation’s operational center for the
application of technologies in the fields of security and
defense. WATC provides access to the latest develop-
ments in security technology and the opportunity to
perform high visibility, challenging and meaningful
programs in the interests of national security and defense.

The WATC mission is to apply operations research,
systems analysis, systems engineering and scientific
principles to matters, concepts and systems con-
cerned with security and defense programs. Its princi-
pal groups are:

• The Systems Engineering and Integration Group,
which employs engineering and software/hardware
integration skills to implement physical and elec-
tronic security systems;

• The Security Systems and Analysis Group, which
conducts surveys and requirement studies, and
develops implementation plans; and also provides
quality assurance and control services to the nuclear
power and energy industry; and

360

GOVERNMENT SERVICES

• The Defense Systems Analysis Group, which con-
ducts studies of military systems’ effectiveness and
survivability, develops models and simulation for
military applications, performs threat and mission
analyses, arms control studies and crisis manage-
ment planning, provides testing and evaluation
support and forecasts technology impact on future
military systems.

WACKENHUT CORRECTIONS CORPORATION

offers a full range of correctional services to federal,
state and municipal agencies throughout the United
States, and is positioned to extend them to other
countries as well. It stands today as the premier
provider of private sector correctional management
and support services when judged on the basis of
quality of services, financial strength and general
liability insurance protection.

The Wackenhut Corrections staff is particularly adept
and experienced in assisting and advising government
agencies and community representatives on methods
of financing new facility construction, such as tax
exempt municipal bonds or certificates of participation,
and has developed relationships with major public
finance underwriters. Through its established relation-
ships with builders and architects, Wackenhut
Corrections Corporation can also assist agencies in
identifying opportunities to save costs, as well as time
during the planning and construction phases for new
facilities.

The Corporation has established model programs in
rehabilitation, educational, vo-tech and drug counsel-
ing programs at its operating facilities, as well as
community oriented outreach projects. Its prison and
jail operations include food service, health and medical
treatment programs, transportation of prisoners and the
full spectrum of logistical tasks required to operate a
modern correctional facility.

Wackenhut Health Services, Inc., is the subsidiary
which provides the medical staff and services to each
Wackenhut Corrections facility and also offers the same
quality of professional medical service to correctional/
detention facilities which are managed by other organi-
zations or government agencies.

Wackenhut’s Support Services Division, in a similar
manner, provides comprehensive food service under
the supervision of a Corporate staff and regional offices
not only to each Wackenhut correctional facility, but to
other sites which have not been privatized, or are under
the overall management of other private sector organi-
zations.

Wackenhut’s endeavor to provide quality service
throughout its network of correctional sites is reflected
in its broad policy of adherence to the recommended
standards of the American Correctional Association
(ACA) and in its goal of seeking full accreditation by the
ACA as well as state certification at each of its contract
sites.

361

(iO\ KRNMHNT SHRYIUKS

Those correctional/detention facilities under the man-
agement of Wackenhut Corrections Corporation as of
March, 1991, include:

Location
Aurora, CO
New York, NY
McFarland, CA

Allen Parish, LA

Bridgeport, TX
Kyle, TX
San Antonio, TX
Detroit, Ml

Type

INS detention facility

State return-to-custody correctional

facility

State medium security correctional
facility

State correctional facility
State correctional facility
State parole violator prison facility
Municipal pre-trial jail facility

Several other locations and agencies have contracted
with Wackenhut for limited services, such as health
care or food; and for the operation of other facilities
which are presently in the planning or construction
stages.

Through the assets of its varied government services
subsidiaries and divisions, The Wackenhut Corporation
emerges as the true leader in the services industry for
innovations and improvements in quality and profes-
sionalism.

362

1990: Year Of Expansion
For International
Subsidiary

Wackenhut International. Inc., experi-
enced increased revenues in 1990 due to
three additional contracts with the U.S. De-
partment of State for security services at
overseas Embassies and Missions: growth in
the commercial services provided by its
worldwide subsidiaries, particularly in
Canada and Puerto Rico: and also additional
international projects by the headquarters-
based Technical Services Division.

The Corporation was awarded State
Department contracts for the protection of
government personnel and assets in Costa
Rica. The Gambia, and Honduras: and
received contract renewals for similar
services in Morocco. Peru and El Salvador
during the year. The contract in The Gambia
marks the Corporation's initial business in
that country.

There are now fifteen countries in which
Wackenhut International has been entrusted
with security services for the U.S. Embassy.
Mission, and/or related facilities. During the
closing months of 1990, an increased state
of readiness was placed in effect at most
such locations in reaction to world events
related to the United Nations' mandate and
military exercises in opposition to the Iraqi
invasion and conquest of Kuwait.

The Corporation's increased business in
Canada was due to aggressive expansion in
Quebec Province, and the acquisition of a
security company headquartered in the city
of Quebec. Wackenhut operations in Puerto
Rico also experienced substantial revenue
and income increases in 1990. Alarm moni-
toring services were introduced to business
and commercial clients in the Philippines,
Paraguay. Uruguay and Ecuador during the
year.

Wackenhut International's technical
services staff, operating from the Corporate
Headquarters in Coral Gables, was
contracted by Westinghouse Electric
Corporation in 1990 to provide security
services and technical personnel in support
of some of its key overseas projects.

The Persian Gulf crisis of the latter
months of 1990 and the war situation of
early 1991. created the requirement for
increased alert status at the majority of the
Corporation's worldwide security opera-
tions. The job performance and crisis man-
agement capabilities of W.I.I. was tested to
extreme limits, and each challenge was met
in a completely professional manner.

363

INTERNATIONAL V OPERATIONS

Wackenhut International, Inc.
(W.I.I.), is the operating unit
which coordinates the varied
operations of The Wackenhut
Corporation in over forty
countries, on six continents.
The following pages list the
locations of the W.I.I. subsid-
iaries, affiliates, licensees and
representatives.

This professional network
enhances the Corporation’s
ability to provide comprehen-
sive security-related services
to multinational corporations
and other businesses operat-
ing across international

borders. The network also provides private sector
sources of information for the Corporation’s Interna-
tional Risk Forecast, a computer-based data bank of
information and risk analyses in eighty different coun-
tries. It is continuously updated as a service to interna-
tional corporate and business clients.

International capabilities include physical security
services, executive protection, alarms, investigative
services, and security analysis. Certain countries have
additional services, such as the armored car and
payroll transport services in Ecuador, and the collection
of highway tolls in Colombia.

W.I.I. specializes in conceptual design and engineering
of security systems, to include alarm monitoring,
access control, central station and consulting services
throughout the world. Wackenhut International has a
separate trading division for the procurement, supply
and sale of security-related systems and equipment in
the international arena.

The Corporation takes patriotic pride in its selection by
the U.S. Government to protect government officials,

U.S. citizens, and physical
assets at an increasing
number of United States
Embassies and Missions in
other countries.

Some locations present
particular challenges
because of the presence of
active insurgencies or the
likelihood of terrorist activities.
The Corporation pledges its
commitment to continued
quality performance at each
site, particularly in view of the
high level of confidence
placed in Wackenhut’s profes-
sional approach to contract

performance by U.S. government agencies and officials.

The Corporation’s distinguished business partners
throughout the international community of nations have
extended their full range of professional services to
their local governments, and have been entrusted with
an array of critical and sensitive tasks, such as protec-
tion of dams, highways, airports and government
personnel and buildings.

Wackenhut’s international capabilities far exceed those
of any other U.S. -based private security organization
and its international development and diversification
represent principal discriminators, further identifying
The Wackenhut Corporation as the premier provider of
worldwide security related services.

The Corporation's vision of the future includes, as an
integral part of its planning process, continued market-
ing of its international capabilities and expansion of its
client base in both the governmental and commercial
sectors — made possible through increased recogni-
tion of the Integrity, Professionalism, and Quality of its
international line of services.

364

Worldwide Locations

Subsidiaries, Affiliates, Licensees and Representatives

ARGENTINA

SEARCH ORGANIZACION DE
SEGURIDAD. S A
Fernando Kelly. President
Tronador 543
Buenos Aires 1427
(Capital Federal). Argentina
Tel (01 1-54-1) 551-2488 &
552-2364/4763
Fax (011-54-1)553-2176

NET ALARM. S A
Gabriel Taraciuk. President
Tronador 529
Buenos Aires 1427
(Capital Federal) Argentina

AUSTRALIA

INTELLISEC AUSTRALIA PTY LTD
Steve Benton. Managing Director
122 Castlereagh St Sydney
New South Wales 2000 Australia
Tel (011-61-2)925-0899

BELIZE

WACKENHUT BELIZE LIMITED

Mario Rodriguez. Deputy Protect

Manager

Upper Flat

Save U Supermarket

Belize City. Belize C A.

Tel (011-501-2)31419
Fax (011-501-2)30802

BRAZIL

GRW. Ltda

Df Sergio H Coelho

Caixa Postal No 2176

CEP 20001 Rio de Janeiro. Brazil

Tel (011-55-21)224-9201

Telex 2130062 CVAD BR

PIRES. Servicios de Seguranca Ltda

Manoel Correira Boteiho. Director

Rua Alfredo Puiol 1 102

CEP 02017. Santana. Sao Paulo. Brazil

Tel (011-55-11)299-8811

Telex 3591 1 PSGB BR

Fax (011-55-11)267-3395

CAMEROON

WACKENHUT CAMEROON

Robert Jones. Protect Manager

B P 1387

Derriere La Sesi

Yaounde. Cameroon

Tel (011-237)201289/221649

Fax (011-237)201289

CANADA

WACKENHUT OF CANADA LIMITED
Mr Dean F Owen. President
1370 Dundas Street. East. Suite 300
Mississauga. Ontario.

L4Y 4G4 Canada
Tel (416)897-7520
Fax (416)897-7534

Area Offices
Calgary. Alberta

Edmonton. Alberta

Medicine Hat. Alberta
Kitchener. Ontario
London. Ontario
Ottawa. Ontario
Sarnia. Ontario
Toronto. Ontario
Windsor. Ontario

WACKENHUT DU QUEBEC
Conrad Labne. President
3850 Cote Vertu

St "Laurent. Quebec H4R 1VA Canada
Tel (514)965-0001
Fax (514)965-0003

CHILE

WACKENHUT CHILE. S A
Alfredo Leontic. President
Ave E|ercito#171
Santiago. Chile
Tel (011-56-2)696-1683
Telex 341596 WACKEN CK
Fax (011-56-2)698-6217

EULEN CHILE. S A
Alfredo Leontic. President
Ave. Ejercito #171
Santiago. Chile
Tel (011-56-2)696-1683
Telex 341596 WACKEN CK
Fax: (01 1-56-2) 698-6217

COLOMBIA

WACKENHUT DE COLOMBIA. S A
(WACOL)

Salvador Otero Ospma. President

Ave 82 #7-53. Apartado Aereo #4008

Bogota. Colombia

Tel (011-571)310-0088

Telex: 45426 SETEC CO

Fax: (011-571)285-9012

Area Offices

Barranquilla Manizales
Bogota Monteria

Boyaca Medellin

Cali Pereira

Cartagena

SEGURIDAD MOVIL DE COLOMBIA.
S A (MOVILSA)

Hernando Duarte Plazas.

General Manager

Avemda Americas #4108

Bogota. Colombia

Tel (011-571) 2444503/2443922/

2443718/2446796

SEGURIDAD TECNICA. S A
(SETECSA)

Fernando Amaya. General Manager

Calle 34 #14-57

Bogota. Colombia

Tel (011-571)285-1981/245-3090

Telex 45426 SETEC CO

Fax: (011-571)285-9012

365

COSTA RICA

WACKENHUT. S A

Jorge Solano. General Manager

Apartado 923 Escazu

San Jose. Cosia Rica

Tel (011-506)338516

Fax (011-506)338516

CYPRUS

WACKENHUT SECURITY CYPRUS
Mr K Chnsostomides. President
29. Stasikrates Street
Nicosia. Cyprus
Tel (01-357-21)224-8278

DOMINICAN REPUBLIC

WACKENHUT DOMINICANA, S A
(WADSA)

Gabriel Alma Selman. President
Paseo de Los Locutores #36
Ensanche Piantim. Apartado #1677.
Zona # 1

Santo Domingo. Dominican Republic
Tel. (809) 544-3333/37
Fax (809)567-4767
Area Offices
Puerto Plata
Santiago
Santo Domingo

ECUADOR

WACKENHUT DEL ECUADOR S A
(WESA)

Hector Santacruz Hidalgo. President
Valladolid 936 y Cordero
Casilla #17-1 1-04791
Quito. Ecuador

Tel (01 1 -593-2) 547-986/550-602
Fax (011-593-2)503-078
Area Offices
Cuenca Manta

Guayaquil Quito

SEGURIDAD MOVIL DEL ECUADOR.
S A (MOVILSA)

Hector Santacruz Hidalgo.

General Manager
Valladolid 936 y Cordero
P O Box 17-11-04791
Quito. Ecuador

Tel (01 1-593-2) 547-986/550-602
Fax: (01 1-593-2) 503078

EL SALVADOR

WACKENHUT DE EL SALVADOR. S A
,'WACSAL)

Rene A Vela. General Manager
Edificio Espinoza
Pasaje San Antonio esq
Avenida Americas
Coloma Isidro Mendez
San Salvador. El Salvador. C A
Tel (011-503) 25-6222/25-6311
Fax (011-503) 256255

GAMBIA

WACKENHUT INTERNATIONAL. INC

Michael Jaquish, Project Manager

c/o American Embassy

Banjul. The Gambia

West Africa

Tel (011-220)93772

Fax (011-220)90009

GERMANY

WACKENHUT CENTRAL EUROPE
GMBH

Dr Hans Gartner
Tulpenhofstrase 18
6050 Offenbach am Mam
Federal Republic of Germany
Tel : (01 1-49-69) 81 7025
Telex 4161621 AD VI

INTERNATIONAL OPERATIONS

GREECE

WACKENHUT SECURITY (HELLAS) LTD
Andreas Paterakis. Managing
Director 54, Amalias Avenue
Athens 10558, Greece
Tel (011-30-1)324-4771-3
Telex 225469 WACK GR
Fax (011-30-1)325-4732

GUATEMALA

WACKENHUT DE GUATEMALA. S A
(WAGSA)

Fernando Hegel General Manager

Calle 14 8-51, Zona 10

Barrio Santa Clara

Guatemala, Centro America

Tel (011-502-2)68-0247/37-0288

Telex 5208 SALTO GU

Fax (011-502-2) 68-0247/37-0288

HONDURAS

WACKENHUT HONDURAS. S A
Antonio Tavei, General Manager
John D Balent. Project Manager
Apartado Postal 1 792
Tegucigalpa. Honduras
Tel (011-504) 320833/320778
Fax (011-504)320833

HONG KONG

WACKENHUT SECURITY (H K )
LIMITED
Mr Arthur Kwok
1404 Argyle Centre I.

688 Nathan Road

Kowloon. Hong Kong

Tel (011-852)903456

Fax (011-852) 541-5700/789-8311

INDONESIA

PT DANAR TEJA PERKASA
G P Arya

JL Hayam Wuruk No 100-1
Jakarta Barat, Indonesia
Tel (011-62-21)621376/621386/
650729

Telex 41S60DATESAIA

JAPAN

WACKENHUT KEIBI. K K
Shoichi Asaji, President
Takemaru Takeuchi. Managing
Director

Ginza-Matsuyoshi Building
Gmza 7-17-8

Chuo-ku. Tokyo 104, Japan
Tel (011-81-3)3542-3213
Telex 242-4407 WJIJ
Fax: (01 1-81-3) 3542-3214

KOREA

WACKENHUT KOREA
CORPORATION
Myong-Wook Kim, President
8-2 Namyong-Dong
Yongsan Ku
CPO Box 5386
Seoul. Korea
Tel (011-82-2) 794-6759
Telex 26555 ABRCO K
Fax (011-82-2) 797-4053

KUWAIT

c/o WACKENHUT
INTERNATIONAL. INC
1500 San Remo Avenue
Coral Gables FL 33146
Tel (305)666-5656

LIBERIA

WACKENHUT LIBERIA.

INCORPORATED

Henry B Sturm General Manager

Tubman Blvd . Smkor

Monrovia Liberia

Tel 261-474/262-784

Telex: 44227 RASAMNY LI

MEXICO

SERVICIOS PROFESIONALES DE
PROTECCION Y SEGURIDAD. S A
deC V (SPPS )

Jorge A Velazquez Long.

General Manager

Mar Mediterraneo #133. Col Popotia

1 1400 Mexico. D F

Tel (01 1-52-5) 527-5826 396-2488/

5705/5725

Fax (01 1-52-5) 527-5826/355-9067
Area Office
Guadalajara

INMOBILIARIA WACKENHUT

Jorge A Velazquez. General Manager

Mar Mediterraneo #133, Col Popotia

11400 Mexico. D F

Tel (01 1-52-5) 396-2488/5705/2725

Fax (011-52-5) 527-5826

MOROCCO

WACKENHUT MOROCCO. INC
John C Garon. General Manager
Ex Villa Bouabid

(A Cote du General Hossm Benslimane)
Lot 3. Bir Kacem
Rabat. Morocco

Tel (01 1-212-7) 756874/753261

Telex 32608

Fax (011-212-7) 757146

NEW ZEALAND

MSG. MORLEY SECURITY GROUP LTD
Trevor Morley

Hamilton Chambers 199-201
Lambton Quay
Wellington, New Zealand
Tel (011-64-4)711663
Fax (011-64-4)711330

PANAMA

SEGURIDAD TECNICA. S A (SETECSA)
Henry Ford. President
Apartado 4284

Panama 5. Republics de Panama
Tei (011-507)27-5344/25-0780/
27-5014

Fax (011-507)27-5758

WACKENHUT INTERNATIONAL
(PANAMA). S A
Dr Mariano Oteiza
Icaza. Gonzalez Ruiz y Aleman.
Edificio IGRA Pt$o 4 y 5
Calle Aquilino de la Guardia
P O Box 850

Panama 1 . Republics de Panama
Tel (011-507)23-8540
Telex 23477

PARAGUAY

WACKENHUT PARAGUAY S R L
Gonzaio Salsamendi.

General Manager
Ave Santrsima Trinidad 536
Asunoon Paraguay
Tei (011-595-21)666326
Teiex 917 PY ANTElCOBTh
F ax (011-595-21)294055

PERU

PERUANA DE SEGURIDAD Y
VIGILANCIA S A (PESEVISA)

Jorge Ravettino, General Manager
Avenida Arequipa 4856
Miraflores, Lima. Peru
Tel (011-51-14)478973/475183/
313871

Telex 20300 PE SMGL
Fax (011-51-14)475183

PHILIPPINES

WACKENHUT PHILIPPINES LTD

c/oW C Soong

Electro Systems

Celso L Dayrit, Manager

Enzo Building

G-Floor. 399. Sen -

Gil J Puyat Avenue

Makati. Metro. Manila

Tel (011-63-2)8183575

Fax (0 1 1 -63-2) 8177136

PUERTO RICO

WACKENHUT PUERTO RICO. INC
Aureho Rosado. General Manager
Puerto Rico District
Calle Manuel Camunas #5,

Urb. Tres Monjitas
Post Office Box 1805
Hato Rey. Puerto Rico 00918
Tel.: (809) 754-6650
Fax (809)765-1095
Branch Offices
Caguas
Mayaguez
Ponce

TAIWAN

WACKENHUT SECURITY TAIWAN
CO.. LTD

c/o Huang Lung Investment Holding Co

Mr Huang Lung/Albert Ma

4th Floor. 650C. Tun Hwa South Road

Taipei, Taiwan. ROC

Tel : (01 1-886-2) 704-4969

Telex 14054 TWEIE

Fax: (011-886-2) 706-2703

THAILAND

WACKENHUT THAILAND CO . LTD
Krongyos Suwannakorn.

General Manager
52 Rama 9 Road
Kiong Sansaeb Bang Kapi
Huay Kwang

Bangkok, Thailand 10310

Tel (01 1-66-2) 318-9955/318-9956

Telex 21029 BLCTDTH

Fax (01 1-66-2) 254-2534/319-9001

TURKEY

WACKENHUT TURKEY. A S

c/o Aslan Nun Messeretciogiu

Yanmar End VeTicAS

Yiidiz Posta Cad

Akin Sitesi B2 Blok No 8 D 35

80280 Gayreltepe

Istanbul. Turkey

Tei (011-90-1) 175-5140

Telex 26025 YANATR

Fax (011-90-1) 175-0008

UNtTED ARAB EMIRATES/ABU DHABI

General Trading Establishment
M A Al Mazroui
Post Office Box 2151
Abu Dhabi. United Arab Emirates
Tei (011-971-2)320620
Telex 22574 FANDI EM

UNITED KINGDOM

WACKENHUT UK. LIMITED (WUK)
Anthony H Sharpe, Managing Director
875. Sidcup Road
New Eltham

London SE9 3PP. England
Tel (011-44-81)850-4647
Telex 27746 WACKUKG
Fax (011-44-81)850-0612
Area Offices
Aberdeen Scotland
Corby-Northamptonshire
Heathrow Airport

ADVANCED SECURITY
TECHNOLOGY LTD
David Benton. Manager

URUGUAY

WACKENHUT URUGUAY. S A (WUR)

Armando Mendez Caban, President

Domingo Aramburu 2121/23

Montevideo. Uruguay

Tel (0 1 1 -598-2) 236200/2946 1 8

Telex: 23263 FRIMORAUY

Fax (011-598-2)294618

VENEZUELA

C/O WACKENHUT
INTERNATIONAL, INC
Fernando Carnzosa, President
1 500 San Remo Avenue
Coral Gables. FL 33146
Tel (305)666-5656

366

George R. Wackenhut

George R. Wackenhut is Chairman of the Board and
Chief Executive Officer of the Corporation. He was
President of the Corporation from the time it was founded
until April 26, 1986. He formerly was a Special Agent of
the Federal Bureau of Investigation. He is a member of
the Board of Directors of SSJ Medical Development, Inc.,
Miami, Florida, and is on the Dean’s Advisory Board of
the University of Miami School of Business. He is on the
National Council of Trustees, Freedoms Foundation at
Valley Forge, and the President’s Advisory Council for the
Small Business Administration, Region IV. He is a past
participant in the Florida Governor’s War on Crime and a
past member of the Law Enforcement Council, National
Council on Crime and Delinquency, and the Board of
Visitors of the U.S. Army Military Police School. He is also
a member of the American Society for Industrial Security.
He was a recipient in 1990 of the Labor Order of Merit,
First Class, from the government of Venezuela. Mr.
Wackenhut received his B.S. degree from the University
of Hawaii and his M.Ed. degree from Johns Hopkins
University. Mr. Wackenhut is married to Ruth J.
Wackenhut, Secretary of the Corporation. (a)(f)

MEMBERS OF THE BOARD OF

IRECTORS

John S. Ammarell was Executive Vice
President of the Corporation from
1959-83 and is presently a Senior
Consultant to the Corporation. He was
President of Newberry College,
Newberry. S.C. from May 1984 to July
of 1986. Prior to joining The Wackenhut
Corporation in 1958, he was a Special
Agent of the Federal Bureau of Investi-
gation. Mr. Ammarell received his A.B.
degree from Muhlenberg College and
was awarded an honorary Doctor of
Laws Degree by Muhlenberg in 1986.
(a)(f)

Robert E. Chasen is President of
Robert E. Chasen and Assoc., Inc., a
management consulting firm. He is

currently a Senior Consultant to The
Wackenhut Corporation. After serving
as a Special Agent of the Federal
Bureau of Investigation, Mr. Chasen
joined the International Telephone and
Telegraph Corporation in 1952. At ITT,
he was elected President and Chairman
of the Board of the Federal Electric
Corporation, a major ITT subsidiary,
and then served as ITT Group Vice
President of the Government and
Commercial Services Group. In 1977,
after 25 years of ITT service, Mr. Chasen
retired to accept the post of United
States Commissioner of Customs, which
he held until late 1980. He was gradu-
ated in 1943 from Benjamin Franklin
University with a B.C.S. degree. (b)(d)

John S. Ammarell
Robert E Chasen

367

Frederick M. Glass, Willis M Hawkins, Paul X Kelley. Robert Q Marston

Frederick M. Glass is a financial and
management consultant. He formerly
was Vice Chairman and Chief Financial
Officer of Thine Group, Inc.; Executive
Vice President and a Director of Hertz
Corporation; President, Chief Executive
Officer, and a Director of National Car
Rental System; and President, Chief
Executive Officer and a Director of
Prudential Funds, Inc. He presently
serves as a Director of Avemco Corpora-
tion, an aviation insurance company;
Premier Life Insurance Company; and
Gencor Industries, Inc., an asphalt
equipment manufacturer. Mr. Glass is a
graduate of the University of Mississippi
and Northwestern University School of
Law. He holds degrees of Bachelor of
Arts, Bachelor of Laws, Doctor of
Jurisprudence and Master of Laws.
(aXcXg)

Willis M. Hawkins is a Senior Advisor
and former director of Lockheed
Corporation. Mr. Hawkins served in
various capacities at Lockheed from
1937, until he retired in May, 1974, as
Senior Vice President of Science and
Engineering. In December, 1976, he was
recalled to serve as President of
Lockheed-California Company and as
Corporate Senior Vice President. He
retired as Senior Vice President in
January, 1980, and from the Board of
Directors in May, 1980. During his career,
he played a major role in the design and
development of many Lockheed aircraft,
missile systems, and space vehicles,
and had top level managerial responsi-
bility for extensive space programs. He
served from 1978-1980 as a Trustee of
the Riverside Research Institute, a non-
profit contract research and analysis
company. During 1963-66, he served as
Assistant Secretary of the Army for
Research and Development. He is a
Director of Avemco Corporation, an
aviation insurance company. Mr. Hawkins
was graduated from the University of
Michigan in 1937 with a B.S. degree in
aeronautical engineering and is the
recipient of an Honorary Doctor of
Engineering degree from the University
of Michigan and an Honorary Doctor of
Science degree from Illinois College. He
is a member of numerous professional
societies, including Tau Beta Pi (honorary
engineering society) and the National
Academy of Engineering, and is an
Honorary Fellow of the American Institute
of Aeronautics and Astronautics and a
Fellow of the Royal Aeronautical Society.
He was awarded the National Medal of
Science by President Reagan in 1988.
(cXe)

Paul X. Kelley is the Vice Chairman of
Cassidy and Associates, Inc., a govern-
ment relations firm in Washington, D.C.
He is also on the Board of Directors of
Allied-Signal, Inc., an aerospace,
automotive products, and engineered
materials company; American Security
Bank, N.A.; GenCorp, Inc. a propulsion,
defense electronics, and ordnance
company; The Holden Group, a financial
services company, Brassey (U.S.), a
publishing company; PHH Corporation,
a vehicle, relocation, and facilities
management services company; Sturm,
Roger and Co., Inc., a small arms
company; and United Services Life
Insurance Company. He is the former
Commandant of the Marine Corps,
having retired as a four-star General in
1987. As a Marine officer, he com-
manded an infantry battalion in Vietnam
during 1966; and during 1970-71, he
commanded the 1st Marine Regiment,
the last Marine ground combat unit to
leave Vietnam. He later commanded the
4th Marine Division, and was the first
commander of the Rapid Deployment
Joint Task Force, a four service force
headquartered in Florida. He is the
recipient of numerous awards for valor
and distinguished service during over
thirty-seven years of active military
service. General Kelley has a B.S. in
economics from Villanova University
and is a graduate of the Air War
College. He has been awarded
honorary doctoral degrees by four
major universities. (b)(e)

Robert Q. Marston is Chairman of the
Board of Cordis Corporation, a health
products company. He was President of
the University of Florida for a decade,
1974-1984, and he became President-
Emeritus on September 1, 1984. Prior to
assuming the University of Florida post.
Dr. Marston was Vice Chancellor and
Dean of Medicine at the University of
Mississippi, Jackson; Director of the
National Institutes of Health, Bethesda,
MD; Scholar in Residence. University of
Virginia, Charlottesville, and Distin-
guished Fellow at the National Academy
of Sciences, Washington, D.C. He is a
Director of Johnson & Johnson, a health
products company; and the First National
Bank of Alachua, Florida. He is also
Chairman of the Safety Advisory Board of
General Public Utilities for the clean-up of
Three Mile Island. He is past Chairman of
the National Association of State Univer-
sities and Land Grant Colleges, and a
member of senior national medical
organizations in his field, including
medical components of the National
Academy of Sciences. He is Chairman of
the Commission on A/ledical Education of
the Robert Wood Johnson Foundations,
and an advisor to the National Academy
of Sciences. He is also a member of the
Board of Visitors of Virginia Military
Institute. Dr. Marston received a B.S.
degree from the Virginia Military Institute,
an M.D. degree from the Medical College
of Virginia and a B.S. degree from Oxford
University. He is a Rhodes Scholar and a
Markle Scholar. (bXdXg)

368

Seth J. McKee retired from the United
States Air Force in 1973 after 38 years
of military service. At retirement, he
was the Commander-in-Chief of the
North American Air Defense Command.
He also served as Assistant Vice Chief-
of-Staff of the United States Air Force in
1968-69; Commander of the United
States Forces in Japan and the 5th Air
Force from 1966-69; Director of Plans
of DSC/Plans and Operations, and
Assistant Deputy Chief-of-Staff/Plans
and Operations for Joint Chiefs of Staff
Matters at the United States Air Force
Headquarters, 1965-1966. General
McKee has a B.A. Degree from the
University of Oklahoma and is a
graduate of the United States Air Force
Air Command and Staff School. Since
retirement from the Air Force, he has
served as consultant to/or Director of a
number of U S. corporations. (c)(e)

Raymond A. Quadt is Vice Chairman
of Sunstate Bancshares, Inc., an
Arizona bank holding company; Board
Member and Treasurer of Arizona
Vision Service Plan, an eye care
provider to employee groups; and
Advisory Board Member of Interactive
Media Technologies, which specializes
in multimedia development of com-
puter based interactive video products

and software systems. He was formerly
consultant for Phoenix Cement Com-
pany (1980-83) and served as its
President from 1973-80. He was
formerly Vice President of Pascoe Steel
Corporation, a designer and producer
of prefabricated steel buildings;
Chairman of the Board of Loud Com-
pany, a firm engaged in the machining
of castings; Vice President of Special
Metals Division of Bridgeport Brass
Company; President and General
Manager of Reactive Metals, Inc., a
producer and fabricator of titanium and
zirconium for the aerospace, missile,
and nuclear industry; Vice President of
Research of the Hunter Douglas
Aluminum Corporation; and General
Manager of the Aluminum Department
of American Smelting and Refining
Company. He is Director, and Secre-
tary/Treasurer of Travel VIP, Inc., a
travel agency. Mr. Quadt received his
B.S. degree from Rutgers University,
his M S. degree from Stevens Institute
of Technology, and his M.A. degree
from Columbia University. (a)(c)(g)

Nancy Clark Reynolds is Vice Chair-
man of The Wexler Group, a govern-
mental relations and public affairs
consulting firm in Washington, D C.

She currently serves as a Director of

Sears, Roebuck & Co. and The Norrell
Corporation, a temporary help service
firm. She is a member of the Board of
Overseers of The Executive Council on
Foreign Diplomats and the U S.
Advisory Council of the International
Executive Service Corps as well as the
Boards of the Bryce Harlow Founda-
tion, and the Economic Club of
Washington. She is a past president of
the Business and Government
Relations Council. She was formerly a
Director of the Chicago Mercantile
Exchange, G.D. Searle & Co., and
Viacom International. From 1977-82,
she was a Vice President of the Bendix
Corporation. She received her B.A.
degree in English from Goucher
College and a Honorary Degree of
Laws from Gonzaga University.(b)(e)(f)

Bernard A. Schriever is a technical
and management consultant and
serves as a Director of Emerson
Electric Company, an electrical
equipment manufacturing firm; and
Advance Technology Ventures, a
venture capital group involved in high
technology companies. He previously
served as Chairman of the President's
Advisory Council on Management
Improvement. He is a former member
of the President’s Foreign Intelligence
Advisory Board. In 1966, he retired as
a General of the United States Air
Force, specializing during the last 17
years of his military career in military
research and development programs
and from 1959-66, he served as
Commander of the Air Force Systems
Command. General Schriever has a
B.S. degree from Texas A & M Univer-
sity, an M S. degree in aeronautical
engineering from Stanford University,
and nine honorary doctoral degrees
from various American colleges and
universities. He is in the Aviation Hall of
Fame, an Honorary Fellow of the
American Institute of Aeronautics and
Astronautics, and a member of the
National Academy of Engineering.
(d)(e)

Seth J McKee. Raymond A Quadt. Nancy Clark Reynolds, Bernard A. Schriever

369

Charles J Simons, Chesterfield Smith. Richard R Wackenhut

Charles J. Simons is a management
and financial consultant and Chairman of
the Board of General Development
Corporation, a land developer Mr
Simons became Chairman and Chief
Executive Officer of General Develop-
ment Corporation just prior to that firm's
chapter 1 1 Bankruptcy filing He was
employed by Eastern Air Lines from
1940 to 1981 (with the exception of
World War II), serving as Vice Chairman,
Executive Vice President and Director.

He currently is a Director of Workwear,

Inc , a work clothes manufacturer and
provider; Sill, a space technology firm;
G.W. Plastics, a high tech molding
company; Allbev, Inc., a bottling company
(where he is Chairman of the Board);
Bessemer Trust Co. of Florida; and
Greenwich Air Services. Inc., an aircraft
and engine overhaul service provider.

He is also a member of the Board of
Directors of the University of Miami Burn
Center, a Trustee of Dartmouth Hitchcock
Medical Center, and a member of the
Board and Treasurer of Mathew Thornton
HMO Mr. Simons received his B.S.
degree in business administration from
Fordham University, and completed the
Advanced Management Training
Program of the Harvard University School
of Business Administration. (c)(dXg)

Chesterfield Smith is a Senior Partner
of the law firm of Holland & Knight, which
rendered legal services to the Corpora-
tion during the fiscal years 1989 and
1990, and which has law offices in
Bradenton, Ft. Lauderdale, Jacksonville,
Lakeland, Miami, Orlando. Tallahassee
and Tampa, Florida and in Washington,

D C. He served as President of the
American Bar Association from 1973-74,
and he served as President of The
Florida Bar from 1964-65. He is a Fellow
of the American College of Trial Lawyers,
the International Academy of Trial
Lawyers, the American Bar Foundation
and the Florida Bar Foundation. He
served as President of the National
Conference of Bar Presidents from 1968-
69, was a member of the Federal
Judicial Nominating Commission of
Florida from 1974-77. and a member of
the Federal Commission on Executive,
Legislative and Judicial Salaries from
1976-77. He is currently a member of the
University of Florida Council of Advisors,

DIRECTOR EMERITUS

the Board of Visitors of the University of
Miami Law School, and the Board of
Visitors of the McGeorge School of Law
at the University of the Pacific. Mr. Smith
is the recipient of nine honorary degrees
from American colleges and universities,
and presently serves as a Director and
Chairman of the Executive Committee of
the Citrus & Chemical Bank, Bartow.
Florida; as a Director of Greenwich Air
Services. Inc ; as a Director of General
Development Corporation, a land
developer; and as Chairman of the
Board of Trustees of The Emerald Funds.
He also serves as an officer or director of
several legal or law related organizations,
charitable or eleemosynary entities, and
public service corporations. He received
a J.D. degree with honors from the
University of Florida in 1948. (b)(f)(g)

Richard R. Wackenhut, President and
Chief Operating Officer of the Corpora-
tion since April 26, 1986, was formerly
Senior Vice President, Operations from
1983-86. He was Manager of Physical
Security from 1973-74. He also served
as Manager, Development at the
Corporation's Headquarters from 1974-
76; Area Manager, Columbia, SC from
1976-77; District Manager, Columbia SC
from 1977-79; Director, Physical Security

Division at Corporate Headquarters
1979-80; Vice President, Operations
from 1981-82; and Senior Vice President,
Domestic Operations from 1982-83 Mr.
Wackenhut is Director of Wackenhut del
Ecuador, S.A.; Wackenhut UK, Limited;
Wackenhut Dominicana, S.A.; and a
Director of several domestic subsidiaries
of the Corporation. He is a member of the
St. Thomas University Advisory Board
and a Director of the Florida Chamber of
Commerce Crime and Drugs Task Force.
He is also a member of the American
Society for Industrial Security and a
member of the Board of Trustees of
Palmer School, a private independent
school. He received his B.A. .degree
from the Citadel in 1969, and completed
the Advanced Management Program of
the Harvard University School of Business
Administration in 1987. Mr. Wackenhut is
the son of George R. Wackenhut, the
Chairman of the Board of The Wackenhut
Corporation, and Ruth J. Wackenhut.
Secretary of the Corporation. (aXd)(f)

(a) Member of Executive Committee

(b) Member of Nominating and Compensation
Committee

(d) Member of Corporate Planning Committee

(e) Member of Contract Oversight Committee

(f) Member of Fair Employment Practices
Committee

(g) Member of Due Diligence Committee

IN MEMOR1AM

Joseph F. Carroll, Lieutenant General, USAF (Ret.), former
Director. U.S. Defense Intelligence Agency, and member of
the Board of Directors from 1971 to 1985, passed away in
January, 1991.

Clarence M. Kelley. Director of the Federal Bureau of
Investigation from 1973 to 1978 and Chief of Police, Kansas
City, Missouri, from 1961 to 1973. He was on the Board of
Directors from 1980 to 1986

370

Senior officers of the Corporation are listed on page five. Other officers are:

J. C. Bachmann
Vice President,

Domestic Business Development
Administration

John W. Bolles
Vice President,

Nuclear Services

John C Evans
Vice President,

Government Services

Thomas C Froeba
Vice President.

Labor Relations

A Robert Frye
Vice President.

Proposal Development

Philip M. Gattuso
Vice President.

Investigations

Thomas P Gilmer, Jr
Vice President,

Technical Operations

Alfredo J Guastella
Vice President,

Domestic Operations

Timothy J. Howard
Vice President,

Associate General Counsel and
Assistant Secretary

John M Krysakowski
Vice President,

Corporate Business Development

Murray Levine
Vice President,

South Florida Region and Custom
Protection Services

Leslie L Lobaugh
Vice President,

International Operations

Sandra L Nusbaum
Vice President,

Human Resources

James P Rowan
Vice President,

General Counsel and Assistant
Secretary

Michael J. Simpson
Vice President,

Management Information Services

George A Zeiss
Vice President,

Client Relations

George C Zoley
Vice President,

Corrections

Paul N Brownell

Tax Advisor and Assistant Treasurer
Juan D Miyar

Controller and Assistant Treasurer

MAJOR SUBSIDIARIES OF THE CORPORATION

Wackenhut Services, Inc.

Coral Gables, Florida
President Timothy P Cole

Wackenhut Corrections Corporation

Coral Gables. Florida
President: George C. Zoley

Wackenhut International, Inc.

Coral Gables. Florida
President Fernando Carrizosa

Wackenhut Airline Services, Inc.

Coral Gables. Florida
President J. A. LeBlanc

Wackenhut Sports Authority, Inc.

Coral Gables, Florida
President: Alan B Bernstein

Secure Travel Services, Inc.

Coral Gables. Florida
President Richard R Wackenhut

Stellar Systems, Inc.

Santa Clara. California
President Thomas P Gilmer, Jr

Wackenhut Applied Technologies
Center, Inc.

Fairfax, Virginia
President: Timothy P Cole

Wackenhut of Alaska, Inc.

Anchorage. Alaska
President: Donald L. Evans

American Guard and Alert, Inc.

Anchorage, Alaska
President Donald L Evans

371

372

TABLE OF CONTENTS

Stock Market Information . ; 29

Selected Financial Data 30

Management's Discussion and Analysis of
Financial Condition and Results of Operations .... 31

Consolidated Statements of Income 35

Consolidated Balance Sheets. 36

Consolidated Statements of Cash Flows 38

Consolidated Statements of Shareholders’ Interest . . 40

Notes to Consolidated Financial Statements 41

Selected Quarterly Financial Data 43

Report of Independent Public Accountants 44

Notice of Annual Meeting 44

373

THE WACKENHUT CORPORATION AND SUBSIDIARIES

MARKET FOR THE CORPORATION’S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

The Corporation's common stock is traded on the New York Stock Exchange under the symbol WAK. Regular
quarterly dividends of $ .15 per share were declared in 1990 and 1989. The Corporation intends to declare
future quarterly cash dividends, depending on its earnings, financial condition, capital requirements and other
relevant factors.

The Senior Note Agreement with two insurance companies requires the Corporation to maintain a minimum of
$27,000,000 in Consolidated Tangible Net Worth increasing by 25% of Consolidated Net Income on a cumula-
tive basis from September 1, 1990. In addition, certain payments arid distributions, as defined, including
dividends, are limited in the aggregate to the sum of $5,000,000 plus 50% of Consolidated Net Income com-
puted on a cumulative basis from December 31 , 1989.

The ensuing table shows the high and low sales prices for the Corporation’s common stock, as reported on the
New York Stock Exchange, for each quarterly period during the fiscal years 1990 and 1989. The prices shown
in the table have been rounded to the nearest 1/8th.

Fiscal Year 1 990 Fiscal Year 1989

Quarter

High

Low

High

Low

First

$27-7/8

$22-3/4

$18-5/8

$17

Second

23-5/8

18-1/8

Third

25-1/4

20-5/8

19-3/8

17-1/8

Fourth

23-5/8

18-5/8

24-3/4

18-3/4

374

THE WACKENHUT CORPORATION AND SUBSIDIARIES

SELECTED FINANCIAL DATA

The selected consolidated financial data should be read in conjunction with the Corporation’s consolidated
financial statements and the notes thereto, which are included at the end of this Annual Report.

For fiscal years: 1990 1989 1988 1987 1986

(In thousands except per share amounts)

RESULTS OF OPERATIONS:

Revenues

Income before income taxes
Provision for income taxes .

Net income

NET INCOME PER SHARE
OF COMMON STOCK (1)

1.80

1.52

1.35

1.47

.63

DIVIDENDS PER SHARE OF COMMON STOCK:
Cash

.60

3.60

.60

$521,191

$462,181

$400,996

$381,972

$328,795

10,180

8,370

7,261

8,219

3,659

3,217

2,496

2,066

2,559

1,241

6,963

5,874

5,195

5,660

2,418

FINANCIAL CONDITION:

Working capital

Total assets

Current portion of long-term debt

Long-term debt

Shareholders’ interest

$ 42,413
164,085

46,850

37,865

$ 40,635
157,681
2,825
48,500
33,616

$ 34,954
150,318
1,500
45,558
30,528

$ 35,588
130,439

10,600

39,653

$ 31,572
115,930

8,400

36,191

(1) The average shares outstanding are 3,858,885 for all years.

THE WACKENHUT CORPORATION AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY

Net working capital was $42,413,000 at December
30, 1 990. The ratio of long-term debt to total
capitalization (long-term debt plus equity) was 55.3%
at December 30, 1990 compared to 59.1% at the end
of the previous year. The Corporation’s return on
average stockholders' Equity was 19.5% for 1990
compared with 18.3% in 1989.

Cash flow provided from operations for fiscal year
1990 amounted to $8,789,000, and was used
principally to reduce outstanding bank borrowings,
for capital expenditures and for the payment of
dividends.

In 1990, Management made significant changes to
the financing arrangements of the Corporation and
believes that these changes, together with cash
generated from operations, provide adequate funds
for the continued growth of the Corporation.

On October 23, 1990, the Corporation entered into
a Note Agreement (the “Agreement”) with two
insurance companies that provides for the issuance
and sale of its $25,000,000 Senior Notes. The Notes
bear interest at 10.2% per annum, payable quarterly,
commencing December 31, 1990.

The Agreement requires the Corporation to make
four annual payments of $5,000,000 each beginning
September 30, 1996 with the remaining outstanding
principal amount becoming due on September 30,
2000. Under the terms of the Agreement, the
Coiporation is required to maintain a minimum of
$27,000,000 in Consolidated Tangible Net Worth
increasing by 25% of Consolidated Net Income on
a cumulative basis from September 1, 1990. Under
other restrictive provisions of the Agreement, the
Corporation is required to maintain certain debt to
net worth and fixed charge coverage ratios. The
payment of dividends and certain types of investments
are also restricted. The Note proceeds were used
principally to reduce the outstanding indebtedness
under the Company’s previous lines of credit with
a bank.

On December 18, 1990, the Corporation entered
into a new credit agreement with a bank which
provides for a $25,000,000 revolving loan that bears
interest at the prime lending rate or lower and
requires the Corporation to comply with essentially
the same covenants as in the Senior Note Agreement
with the two insurance companies. The balance of
the principal amount under the revolving loan is due
on December 31, 1994. Outstanding borrowings
under the revolving line of credit amounted to
$3,600,000 at December 30, 1990.

In 1990, the Corporation extended the $18,250,000
mortgage note on its Headquarters building. The
mortgage note bears interest at the prime lending
rate or lower, and principal payments of $182,500 are
due quarterly commencing March 30, 1992 with the
remaining principal amount due on May 30, 1995.

Since 1988, the Corporation has elected not to
claim as deductions in its consolidated income tax
returns certain reserves of its casualty reinsurance
subsidiary. This action resulted in the payout of
additional Federal income taxes of approximately
$2,000,000 in 1990, and it is estimated that
approximately $2,000,000 will also be paid in 1991.
The taxes paid as a result of this election will be
recovered in future years, when the expenses are
deductible: During fiscal year 1990, the Corporation
paid the last installment of approximately $3,200,000
of the Federal income tax liability that had resulted
from the provisions of the Tax Reform Act of 1986.

Management continues to pursue contracts to
administer and provide security to detention centers.
These contracts require initial outlays of cash for
start-up costs and, in certain cases, for the
renovation of facilities which are partially or fully
recoverable over the original term of the contracts.

Management is unaware of any evident trends that
are likely to result in material increases or decreases
in the liquidity of the Corporation, except for the
payment of Federal income taxes and the initial
capital outlays related to additional detention centers,
as discussed above. The Corporation currently does
not have any commitments that would require large
amounts of cash, and although Management is
constantly reviewing matters which could require
significant outlays of cash, these matters are
reviewed in light of the availability and
appropriateness of financing.

CAPITAL RESOURCES

Current cash requirements consist of amounts
needed to pay Federal income taxes, the initial
capital outlays related to detention centers, routine
purchases of equipment and uniforms, and for
increases in working capital related to increased
revenues. The cash required for these needs will be
derived from internally generated funds and
additional borrowings, as necessary. There are no
known material trends, favorable or unfavorable, in
the capital resources of the Corporation, nor are there
any expected material chapges in either the mix or
relative cost of ihese resources, except for possible
changes in interest rates.

376

THE WACKENHUT CORPORATION AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

In the event that the Corporation would make any
material commitment beyond the matters discussed
above, capital resources are available under its
revolving line of credit with a bank. Management
believes that additional resources may be available
to the Corporation through a variety of other methods .
of financing.

RESULTS OF OPERATIONS

The Corporation is in a service business, and
accordingly, its business is labor intensive. A small
percentage of the Corporation’s employees earn the
minimum wage or slightly more. Increases in state
and Federal wage requirements and increases in
salaries and related payroll taxes of other employees
have significantly increased both revenues and
expenses during the past three fiscal years. Security
guard services are billed at a specified rate per hour
and generally are subject to renegotiation or
escalation if costs increase because of a change in
minimum wage laws or other events beyond the
control of the Corporation. However, delays in
recapturing salary and payroll tax increases through
increased fees and rates have a greater effect on
results of operations than on those of other, less labor
intensive businesses, and have contributed to
fluctuations in quarterly income during fiscal years
1990, 1989, and 1988.

1990 COMPARED TO 1989

Revenues for the year ended December 30, 1990
were $59,010,000 (12.8%) higher than revenues in
1989. The increase was largely due to an increase of
approximately $24,800,000 in revenues of the
Uniformed Guard Services Division, including a new
contract with the New York Racing Association’s
•racetracks, which contributed revenues of
approximately $16,200,000 in 1990. Security services
to U.S. Government facilities were $17,300,000
higher in 1990, largely due to the addition of a new
contract with the Department of Energy for security
services at Rocky Flats. In addition, revenues of the
Corrections Division, which manages correctional
facilities, were approximately $14,800,000 higher
in 1990, evidencing the Company’s successful
penetration of the privatization market. The
Company continued its expansion of its international
operations and increased revenues abroad by
approximately $4,800,000. These increases were
partially offset by lower revenues of the Nuclear and
Travel Divisions.

Security services to U.S. Government facilities, the
New York Racing Association’s racetracks and the
correctional facilities provide lower profit margins
than other aspects of the Corporation's business.

The increases in payroll and related taxes of
$42,403,000 (12.3%) and other operating expenses
of $15,059,000 (14.0%) in 1990 versus 1989 can be
related to the services which provided the additional
revenues. The contracts with the New York Racing
Association, the Department of Energy, and the
revenues of the Corrections Division have a larger
portion of non-labor costs than other services
provided by the Corporation. However, the increase
in other operating expenses was partially offset by
the judgment against a government agency which
amounted to $550,000 and dated back to 1986.

Operating income increased $1,548,000 (16.0%)
for the year ended December 30, 1990 compared
with 1989 principally as a result of higher profit
margins on some traditional services and the
acquisition of the Rocky Flats contract. Other
improvements in operating income occurred
because of improved profitability from investigative
services and from the judgment against a
government agency. These gains were partially
offset by the costs incurred in the formation of a -
dedicated sales force for the Uniformed Guard
Services Division and by a decrease in the operating
income of Stellar Systems, Inc.

Interest expense was $521 ,000 (9.7%) lower in
1990 compared to 1989, principally as a result of the
reduction in interest rates. Conversely, the decrease
in interest rates was a significant factor that
contributed to the reduction in interest income of
$331,000 (9.0%) in 1990 as compared with 1989. In
the fourth quarter of 1990, the Corporation recorded
interest in the amount of $203,000 related to the
judgment against the government agency mentioned
above. However, principally as a result of the
decrease in interest rates, investment income of the
casualty reinsurance subsidiary was $418,000 lower
in 1990 compared to 1989.

The increase in the provision for income taxes of
$721 ,000 (28.9%) was due principally to the increase
in income before income taxes of $1 ,810,000 (21 .6%)
and lower targeted job tax credits. The effective tax
rates for the years 1990 and 1989 were lower than
the statutory corporate tax rate mainly as a result of
targeted job tax credits.

Net income increased $1 ,089,000 (18.5%) due to
the factors mentioned above.

377

THE WACKENHUT CORPORATION AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

THIRTEEN WEEKS (QUARTER) ENDED
DECEMBER 30, 1990 COMPARED TO THIRTEEN
WEEKS ENDED DECEMBER 31, 1989.

Revenues for the quarter ended December 30,

1990 were $13,577,000 (1 1 .3%) higher than revenues
for the same period in 1989, and net income
increased $322,000 (18.3%).

Revenues of the Uniformed Guard Services
Division increased approximately $6,300,000 in the
fourth quarter of 1990. A new contract with the New
York Racing Association’s three racetracks
contributed revenues of approximately $4,000,000.
Revenues from security services to U.S. Government
facilities were approximately $9,200,000 higher
during the quarter, principally due to the acquisition
of a new contract with the Department of Energy for
security services at Rocky Flats. In addition, revenues
of the Corrections Division, which manages
correctional facilities, were approximately $1 ,300,000
higher. These increases were partially offset by lower •
revenues of the Nuclear Division. The Travel Division
also recorded lower revenues as a result of the sale of
some of its branches in December 1989.

Revenues from security services to U.S. Government
facilities, the New York Racing Association's
racetracks and the correctional facilities provide
lower profit margins than other aspects of the
Corporation's business.

The increases in payroll and related taxes of
$12,372,000 (13.9%) and other operating expenses
of $1 ,01 1 ,000 (3.5%) in the fourth quarter of 1990
versus 1989 are related to the services which
provided the additional revenues. The contracts with
the New York Racing Association, the Department of
Energy at Rocky Flats and the Corrections Division
have a larger portion of non-labor costs than other
services provided by the Corporation. However, the
increase in other operating expenses in the fourth
quarter of 1990 was not in line with the increase in
revenues for the same period, principally as a result
of significant decreases in the amortization of start-up
costs of the Corrections Division and the direct costs
of the Travel Division resulting from the sale of some
of its branches.

Operating income increased $194,000 (6.9%) for
the quarter ended December 30, 1990 compared
with 1989 principally as a result of higher profit
margins on some of the Corporation’s traditional
services and the acquisition of the Rocky Flats
contract. Other improvements in operating income
occurred because of a reduction in the operating
losses of Wackenhut Applied Technologies Center,

Inc. and the improved profitability from investigative
services. These gains were partially offset by the
costs incurred in the formation of a dedicated sales
force for the Uniformed Guard Services Division and
by a decrease in the operating income of Stellar
Systems, Inc.

Interest expense was $137,000 (9.6%) lower for the
fourth quarter of 1990 compared to the same period
in 1989 principally as a result of the decrease in
interest rates. Conversely, the decrease in interest
rates adversely affected interest income, which
increased only $28,000 in the fourth quarter of 1990,
compared with the same period in 1989. In the
fourth quarter of 1990, the Corporation recorded
interest in the amount of $203,000 on the judgment
against a government agency mentioned above.
However, principally as a result of the decrease in
interest rates, investment income of the casualty
reinsurance subsidiary was $104,000 lower in
the fourth quarter of 1990 compared to the same
period in 1989.

In addition to the items mentioned above, net
income of the Corporation’s foreign affiliates
increased $183,000 in the fourth quarter of 1990
compared to the same period in 1989. The increase
was principally attributable to the profit contributions
of certain affiliates in Europe and the Far East.

The increase in the provision for income taxes of
$220,000 (37.2%) was due principally to the increase
in income before income taxes of $542,000 and lower
targeted job tax credits. The effective tax rates for the
fourth quarter of 1990 and 1989 were lower than the
statutory corporate tax rate mainly due to targeted
job tax credits.

1989 COMPARED TO 1988

Revenues for the year ended December 31, 1989
were $61 ,185,000’ (15.3%) higher than the year
ended January 1, 1989. The increase in 1989 was
primarily attributable to: (1 ) increases in regular
services to new and existing clients; (2) an increase
of approximately $15,000,000 in services to nuclear
power plants derived from contracts awarded
in the last quarter of 1988 and the first quarter of
1989; and (3) new contracts of the Corrections
Division which started in 1989 and contributed
approximately $17,000,000 to the increase in
revenues. Both the contracts with nuclear power
plants and the new contracts with correctional
facilities have lower profit margins than other aspects
of the Corporation’s business; however, the Company
has been able to increase its profit margins in some of

378

THE WACKENHUT CORPORATION AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

its regular services.

Payroll and related taxes increased $41,197,000
(13.6%) in 1989 compared with 1988 principally as a
result of the increase in labor costs related to the
services which provided the additional revenues.

The increase in operating expenses of $15,625,000
(17.0%) in 1989 compared to 1988 is attributable
principally to the increase in expenses related to new
contracts with correctional facilities and nuclear
power plants. These contracts have a larger portion
of non-labor costs than other services provided by
the Corporation.

The increase in operating income of $4,363,000
(81 .8%) in 1989 compared to 1988 was largely due to
the following factors: (1) higher profit margins in the
regular guard service business; (2) a reduction in the
operating losses of Wackenhut Applied Technologies
Center, Inc.; (3) an underwriting profit in the
reinsurance subsidiary; and (4) an improvement in
the operating results of the Corrections Division due
to the start of operations at several locations. These
factors were partially offset by reduced margins on
contracts of Wackenhut International, Incorporated,
and lower profits in some of its foreign subsidiaries.
The underwriting profit of the reinsurance subsidiary
of approximately $1 .000,000 in 1989 resulted from a
reduction in losses and loss reserves in parental
business compared with an underwriting loss of
approximately $500,000 in the parental business in
1988. The underwriting profits and losses of the
reinsurance subsidiary are reflected as reductions or
increases respectively in other operating expenses.

Interest expense was $3,597,000 higher In 1989

compared to 1988 due to the incurrence of additional
debt, higher interest rates and the interest expense
($1 ,985,000 in 1989 compared to $479,000 for the
fourth quarter in 1988) related to the mortgage note
on the Headquarters building. A subsidiary of the
Corporation acquired the remaining 50% interest in
the partnership which owns the Headquarters
building (the Corporation owns the other 50%
interest) in September 1988. The financial statements
of the partnership have been consolidated into the
Corporation's consolidated financial statements since
that time (see Note 2 to the consolidated financial
statements).

Net income increased $679,000 (13.1%) in 1989
over 1988. The Company’s effective income tax rates
of 29.8% in 1989 and 28.5% in 1988 were lower than
the statutory corporate tax rate due principally to
targeted job tax credits.

THIRTEEN WEEKS (QUARTER) ENDED
DECEMBER 31, 1989 COMPARED TO THIRTEEN
WEEKS ENDED JANUARY 1, 1989

The increase in revenues of $18,599,000 (18.3%)
for the thirteen weeks ended December 31, 1989
compared to the thirteen weeks ended January 1. 1989
was primarily attributable to the following factors:

(1) approximately $6,600,000 contributed by new
contracts of the Corrections Division; (2) increases
in services to U.S. Government facilities of about
$2,000,000; (3) an increase in revenues from food
services related to labor dispute contracts of about
$1,000,000; and (4) increases in regular services to
new and existing clients. The contracts with correctional
and U.S. Government facilities carry a lower profit
margin than other aspects of the Corporation's
business; however, the Company has been able to
increase its profit margins in its regular services.

Payroll and related taxes were $10,416,000,

(13.3%) higher in the fourth quarter of 1989
compared with the fourth quarter of 1988, principally
as a result of the increase in labor costs associated
with the services which provided the additional
revenues.

The increase in operating expenses of $6,787,000
(30.8%) during the thirteen weeks ended December
31, 1989, compared to the same period in 1988
resulted principally from the increase in expenses
related to new contracts with correctional and U.S.
Government facilities.

Operating income increased $1,396,000 (99.7%) in
the fourth quarter of 1989 compared with the fourth
quarter of 1988. The following factors contributed to
the increase: (1) higher profit margins in the regular
guard service business; (2) an underwriting profit in
the reinsurance subsidiary; and (3) an improvement
in the operating results of the Corrections Division
due to the start of operations at several detention
centers since the second quarter of 1989. These
factors were partially offset by reduced margins on
contracts of Wackenhut International, Incorporated,
and lower profits in some of its foreign subsidiaries.

Interest expense was $773,000 higher in the fourth
quarter of 1989 than the same period in 1988. The
increase was due principally to the increased level of
bank borrowings and higher interest rates.

Net income increased $480,000 (37.6%) during the
period. The effective income tax rates of 25.3% in the
fourth quarter of 1989 and 23.2% in the same period
in 1988 were lower than the statutory corporate tax
rate due principally to targeted job tax credits.

379

THE WACKENHUT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE FISCAL YEARS ENDED DECEMBER 30, 1990, DECEMBER 31. 1989 AND JANUARY 1, 1989
(In thousands except share data)

1990

1989

1988

REVENUES

$521,191

$462,181

$400,996

OPERATING EXPENSES:

Payroll and related taxes

Other operating expenses

387,615

122,331

509,946

345,212

107,272

452,484

304,015

91,647

395,662

OPERATING INCOME

11,245

9,697

5,334

OTHER INCOME (EXPENSE):

Interest expense

Interest income

Equity income of foreign affiliates

(4,867)

3,356

446

(1 .065)

(5,388)

3,687

374

0.327)

0.791)

3,407

311

1,927

INCOME BEFORE INCOME TAXES

10,180

8,370

7,261

Provision for income taxes

NET INCOME

3,217

$ 6,963

2,496
$ 5,874

2,066
$ 5,195

EARNINGS PER SHARE

$ 1.80

$ 1.52

$ 1.35

The accompanying notes to consolidated financial statements are an integral part of these statements.

380

THE WACKENHUT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 30, 1990 and DECEMBER 31 , 1989
(In thousands except share data)

ASSETS

1990 1989

CURRENT ASSETS:

Cash $ 4,283 $ 4,213

Accounts receivable,

less allowance for doubtful accounts of $861 and $1 ,389 72,964 63,724

Inventories, at cost 5,402 5,221

Other 4,897 5,206

87,546 78,364

NOTES RECEIVABLE 1,731 2,813

CERTIFICATES OF DEPOSIT and accrued interest thereon of
wholly-owned casualty reinsurance subsidiary 33,638 34,843

PROPERTY AND EQUIPMENT, at cost 47,771 47.787

Less - Accumulated depreciation (13,416 ) (11,641 )

34,355 36,146

OTHER ASSETS:

Investment in and advances to foreign affiliates, at cost,

including equity in undistributed earnings of $776 and $380 3,263 2,230

Other 3,552 3,285

6,815 5,515

$164,085 $157,681

The accompanying notes to consolidated financial statements are an.integral part of. these statements.

381

THE WACKENHUT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 30, 1990 and DECEMBER 31, 1989
(In thousands except share data)

LIABILITIES AND SHAREHOLDERS’ INTEREST

1990 1989

CURRENT LIABILITIES:

Current portion of long-term debt $ — $ 2,825

Accounts payable 7,981 4,412

Accrued payroll and related taxes 24,471 14,886

Accrued expenses 12,681 12,198

Accrued income taxes — 3,408

45,133 37,729

RESERVES FOR LOSSES of wholly-owned casualty reinsurance subsidiary .... 28,594 29,660

LONG-TERM DEBT 46,850 48,500

DEFERRED FEDERAL INCOME TAXES 5,643 8,176

SHAREHOLDERS’ INTEREST:

Common stock $.10 par value;
authorized - 8,500,000 shares;

issued and outstanding - 3,858,885 shares 386 386

Capital surplus 26,621 26,621

Retained earnings 12,397 7,749

Cumulative translation adjustment (1 539 ) (1,140 )

37,865 33,616

$164,085 $157,681

The accompanying notes to consolidated financial statements are an integral part of these statements.

382

THE WACKENHUT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE FISCAL YEARS ENDED DECEMBER 30, 1990, DECEMBER 31, 1989 AND JANUARY 1 , 1989
(In thousands)

1990

1989

1988

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

Adjustments to reconcile net income to net cash

$ 6,963

$ 5,874

$ 5,195

provided by (used in) operating activities:

Depreciation expense

5,219

4,516

3,107

Amortization expense

2,425

2,788

2,802

Provision for bad debts

1 ,379

1,010

830

Equity income, net of dividends

(376)

(262)

(248)

Other

(399)

(471)

(428)

Changes in assets -
(Increase) decrease in:

Accounts receivable

(10,619)

(7,478)

5,530

Inventories

(2,328)

(3,538)

(2,731 )

Other current assets

309

(2,239)

4,596

Certificates of deposit

1 ,205

(545)

(4,157)

Other assets

(1,201)

(933)

(371)

Changes in liabilities -
Increase (decrease) in:

Accounts payable and accrued expenses

3,634

(413)

(8,211)

Accrued payroll and related taxes

9,585

4,069

806

Accrued income taxes :

(3,408)

(361)

(673)

Reserves for losses of casualty reinsurance subsidiary ....

(1,066)

1,535

2,158

Deferred income taxes

(2,533)

(4,976)

(2,012)

NET CASH PROVIDED BY (USED IN )

OPERATING ACTIVITIES

8,789

(1,424)

6,193

(continued)

383

THE WACKENHUT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (concluded)

CASH FLOWS FROM INVESTING ACTIVITIES:

Payments (increases) on notes receivable

Capital expenditures

Purchase of interest in partnership, net of cash acquired ....

NET CASH USED IN INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of debt

Payments on debt

Dividends paid

NET CASH PROVIDED BY (USED IN)

FINANCING ACTIVITIES

NET INCREASE (DECREASE) IN CASH

CASH, at beginning of year

CASH, at end of year

SUPPLEMENTAL DISCLOSURES:

Cash paid during the year for:

Interest

Income taxes

1990

1989

1988

$ 1,082
(3,011)

$ 1,117

(4,144)

$ (163)

(3,242)
(3.013)

(1,929)

(3,027)

(6,418)

50,511

(54,986)

(2,315)

36,676

(32,409)

(2,315)

51,560

(33,352)

(13,892)

(6,790)

1,952

4,316

(2,499)

4,091

4,213
$ 4,283

6.712
$ 4,213

2,621
$ 6,712

4,680

$ 5,131

$ 1,403

8,750

$ 7,210

$ 3,300

The accompanying notes to consolidated financial statements are an integral part of these statements.

384

THE WACKENHUT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ INTEREST

FOR THE FISCAL YEARS ENDED DECEMBER 30, 1990, DECEMBER 31, 1989 AND JANUARY 1, 1989
(In thousands except share data)

Common Stock Cumulative

Number of
Shares

Amount

Capital

Surplus

Retained

Earnings

Translation

Adjustment

BALANCE JANUARY 3, 1988

. . 3,858,885

$ 386

$ 26,621

$ 12,887

$ (241 )

Net income

5,195

Cash dividends, $3.60 per share

—

(13,892)

—

Translation adjustment

—

(428)

BALANCE JANUARY 1, 1989

. . 3,858,885

386

26,621

4,190

(669)

Net income

5,874

Cash dividends, $.60 per share

—

(2,315)

—

Translation adjustment

—

(471)

BALANCE DECEMBER 31 , 1989

. . 3,858,885

386

26,621

7,749

(1,140)

Net income

6,963

Cash dividends, $.60 per share

—

(2,315)

—

Translation adjustment

—

(399)

BALANCE DECEMBER 30, 1990

. . 3,858,885

$ 386

$ 26,621

$ 12,397

$ (1,539)

385

THE WACKENHUT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE FISCAL YEARS ENDED DECEMBER 30, 1990, DECEMBER 31. 1989 AND JANUARY 1, 1989

(1) SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

(A) Fiscal Year

The Corporation’s fiscal year ends on the Sunday
closest to the calendar year end. Fiscal years 1990,
1989 and 1988 each included 52 weeks.

The consolidated financial statements include the
accounts of the Corporation and all of its domestic and
foreign subsidiaries, as well as a foreign casualty
reinsurance subsidiary. All significant intercompany
transactions and balances have been eliminated in
consolidation. Certain prior year amounts have been
reclassified to conform with current year presentation.

A summary of financial data for foreign operations
(exclusive of the casualty reinsurance subsidiary) for the
last three fiscal years is shown below (in thousands).

The profit contribution is before allocation of general and
administrative expenses of the Home Office of The
Wackenhut Corporation and income taxes.

Year Ended

Revenue

Profit

Assets

December 30. 1990

.... $38,915

$1,331

$12,146

December 31. 1989

36,612

1,619

8,470

January 1, 1989

.... 38.779

3,214

9,819

The Corporation carries its investment in foreign affiliates
(20% to 50% owned) on the equity method. Federal
income taxes which would be payable upon transfer of
affiliates' earnings to the Corporation are provided
currently.

The Corporation has a wholly-owned casualty reinsurance
subsidiary in Bermuda. A substantial portion of the sub-
sidiary's business is reinsurance of a portion of the
Corporation’s workers' compensation and general
liability insurance. Premiums are recorded on the
accrual basis and are taken into income pro rata over
the lives of the policies.

Reported losses are recorded by the Corporation as
notified by the insurance company. In addition, a provi-
sion is made to cover losses incurred but not reported.
The reserves for reported losses and losses incurred but
not reported are based on data obtained from the insur-
ance company and on actuarial studies. In the opinion
of management, such reserves are adequate. Future
adjustments of the amounts recorded as of December
30, 1990, resulting from the continuous review process
as well as differences between estimates and ultimate
payments, will be reflected in the Corporation's consoli-
dated statements of income as such adjustments
become determinable.

A summary of operations for the last three fiscal years is
as follows (in thousands):

1990 1969 1988

Premiums recognized $15,419 $14,372 $13,587

Loss expense (14,476) (13,490) (14,551)

Interest income 2,835 3,253 2.564

$ 3,778 $ 4,135 $ 1.600

Premiums paid by the Corporation to the reinsurance
subsidiary of $13,720,000, $1 1,999,000 and $8,544,000
for the fiscal years ended 1990, 1989 and 1988, respec-
tively, have been eliminated in consolidation.

The Company has placed in trust, in favor of certain
insurance companies, $3,545,000 in time deposits and
has issued irrevocable standby letters of credit for
$28,067,000 secured by time deposits of the same
amount. These letters of credit expire through
December 31, 1991.

(D) Income Taxes

The provision (credit) for income taxes consists of the
following (in thousands):

1990

1989

1988

Federal income taxes:

Current

$7,682

$7,252

$5,233

[Deferred

(4.606)

(4,969)

(3.507)

3,076

2.283

1.726

Foreign income taxes

141

213

340

$3,217

$2,496

$2,066

Deferred income taxes result from timing differences in
the recognition of revenues and expenses for tax and
financial reporting purposes. The tax effects of the prin-
cipal timing differences are as follows (in thousands):

1990

1989

1988

Amortization of cash to

accrual method difference . . .

($3,143)

Income of casualty reinsurance

subsidiary

Reserves for losses of casualty

1,285

1,406

544

reinsurance subsidiary

Reserves for claims of

(1.965)

(2,040)

(680)

employee health trust fund . . .

(442)

(884)

(68)

Accelerated depreciation

(484)

(275)

(41)

Allowance for doubtful accounts .

(222)

(241)

Other.net

112

189

122

($4,606)

($4.969)

($3,507)

Through fiscal year 1986, the Corporation filed its tax
returns using the cash method of accounting. As a result
of the provisions of the Tax Reform Act of 1986, in fiscal
1987, the Corporation began filing its Federal income
tax returns using the accrual method of accounting.

The Federal income tax liability at December 28,

1986, which resulted principally from timing differ-
ences between the cash and accrual methods of
accounting, has been paid over a four-year period
ending in 1990.

A reconciliation of the difference between the
expected provision for income taxes using the

386

THE WACKENHUT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

statutory federal tax rate (34%) and the Corporation’s
actual provision is as follows (in thousands):

1990 1989 1988

Provision using statutory

federal tax rate $3,461 $2,846 $2,469

Targeted jobs tax credit (396) (447) (462)

Other, net 152 97 59

Actual provision $3,217 $2,496 $2,066

In December 1987, the Financial Accounting Stan-
dards Board issued Statement No. 96 "Accounting
for Income Taxes." The Corporation is required to
adopt the new accounting and disclosure rules no
later than fiscal year 1992, although earlier implemen-
tation is permitted. Adoption of Statement No. 96 will
result in a catch-up adjustment that may be reported
in income in the year the rules are implemented or in
an earlier year if the Corporation elects to apply
Statement No. 96 retroactively. The Corporation has
not decided when it will adopt the new standard or if
it will restate prior periods. The Corporation is cur-
rently analyzing the provisions of Statement No. 96
and, while the effect has not been quantified, the
Corporation anticipates that the application of the
new statement may improve the Corporation’s
reported financial position. This anticipated favorable
result is due primarily to the fact that, under current
accounting rules, deferred income taxes are
recorded at the income tax rate in effect when the
deferred income taxes arose (34% - 46%) whereas
the new accounting will require that deferred income
taxes be recorded at the rate that will be in effect
when the deferred income taxes are expected to be
paid (34% under the current tax law).

(E) Property and Equipment and Depreciation Methods
The Corporation uses principally the straight-line
method for depreciating property and equipment.

The elements of property and equipment and the
estimated lives used in computing depreciation are
as follows (in thousands):

Years

1990

1989

Land

$ 3,875

Buildings and improvements —

20 to 3316

22,698

22,580

Furniture, fixtures and equipment .

5 to 20

15,366

16,804

Communication equipment, etc. . .

5 to 20

3,521

2,731

Automobiles and trucks

2,311

1,797

$47,771

$47,787

(F) Eaminqs.Per Share

The average shares used in computing earnings per
share for all periods presented was 3,858,885.

(G) Inventories

Alarm systems and electronics inventories are carried at
the lower of cost or market, on a first-in first-out basis.
The cost of manufactured inventory includes material,
labor and manufacturing overhead. Uniform inventories
are carried at amortized cost.

(H) Revenues

Revenue is recognized as services are provided:
accordingly, all revenue earned but unbilled has been
properly accrued at fiscal year end.

During fiscal years 1990, 1989 and 1988, the largest
client of the Corporation was the U.S. Department of
Energy, which accounted for approximately 21%, 20%
and 22% respectively, of the Corporation’s consolidated
revenue, primarily from five contracts of 10%, 5%, 3%, .
2% and 1% in 1990, and four contracts of 10%, 6%, 3%
and 1% in 1989 and 12%, 6%, 3% and 1% in 1988.

(I) Consolidated Statements of Cas h Flo ws

For purposes of the consolidated statements of cash
flows, the Corporation considers highly liquid investments
purchased with a maturity of three months or less to be
cash equivalents.

(2) ACQUISITION OF ASSETS

On September 15, 1988, a subsidiary of the Corporation,
Wackenhut Properties, Inc., acquired a one-half interest
in the partnership which owns the building containing
the Corporation’s Headquarters for $3,500,000. The
other one-half interest in the partnership is owned by the
Corporation. The acquisition was accounted for under
the purchase method of accounting and accordingly,
since September 15, 1988, the operations of the part-
nership have been consolidated with the Corporation’s
operations.

The following unaudited pro forma results of operations,
for the fifty-two weeks ended January 1 , 1989, assumes
that the Corporation acquired the partnership interest at
the beginning of 1988 (in thousands except share data):

Revenue $401,353

Net income $ 4,657

Earnings per share $ 1.21

The pro forma results of operations are not necessarily
indicative of the actual results of operations that would
have occurred had the Corporation acquired the part-
nership interest at the beginning of the year, or of results
which may occur in the future.

(3) LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

1990 1989

Senior notes payable- 10.2% $25,000 $ —

Reducing loan - 9.9% — 6,750

Revolving loan - 9.0% in 1990 and

10.0% in 1989 3,600 25,000

First mortgage note on headquarters
building -9.2% in 1990 and

1 0.5% in 1 989 1 8,250 1 8,250

Note payable - 10.5% in 1989 — 1,325

46,850 51,325

Less - Current portion of long-term debt . . — 2,825

$46,850 $48,500

387

THE WACKENHUT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (concluded)

On October 23, 1990, the Corporation entered into a
Note Agreement (the “Agreement") with two insurance
companies that provides for the issuance and sale of
$25,000,000 of senior notes payable. The Notes bear
interest at 10.2% per annum, payable quarterly, com-
mencing on December 31 , 1990.

Four annual principal payments of $5,000,000 are
required to be made beginning September 30, 1996
with the remaining outstanding principal balance due on
September 30, 2000. The Company has the right to
prepay the outstanding principal balance for a fee which
decreases over the remaining term of the Agreement.
The Agreement requires the Corporation to maintain a
minimum of $27,000,000 in Consolidated Tangible Net
Worth increasing by 25% of Consolidated Net Income
on a cumulative basis from September 1, 1990. In addi-
tion, certain payments and distributions, as defined,
including dividends, are limited in the aggregate to the
sum of $5,000,000 plus 50% of Consolidated Net
Income computed on a cumulative basis from
December 31, 1989.

On December 18, 1990, the Corporation entered into a
four year credit agreement with a bank that provides for
a $25,000,000 revolving credit facility to finance future
working capital needs. The credit agreement has
several rate options which provide for borrowings at the
prime rate or lower. The credit agreement requires the
Corporation to comply with essentially the same
covenants as in the Agreement.

The $18,250,000 first mortgage note on the Headquarters
building has been extended to mature on May 30, 1995.
Quarterly principal payments of $182,500 are required
commencing March 30. 1992 with the remaining princi-
pal amount becoming due and payable at maturity. In
addition, the extended agreement has several rate options
which provide for borrowings at the prime rate or lower.

Aggregate annual maturities of long-term debt are as
follows ( in thousands):

Year

1991

1992 .

1993

1994

1995 .

Thereafter

$46,850

$ -
730
730
4,330
16,060
25.000

(4)

COMMITMENTS AND CONTINGENCIES

The nature of the Corporation’s business results in
claims or litigation alleging that the Corporation is liable
for damages arising from the conduct of its employees
or others. In the opinion of management, there are no
pending legal proceedings that would have a material
effect on the consolidated financial statements of the
Corporation.

The Corporation leases office space, data processing
equipment and automobiles under noncancelable oper-
ating leases expiring between 1991 and 1999. Rental
expense for the fiscal years ended December 30, 1990,
December 31 , 1989 and January 1 , 1989, totaled
approximately $3,806,000, $3,268,000 and $3,773,000
respectively, including approximately $1 ,512,000 in
1988 in connection with the Headquarters building. The
minimum commitments under these leases are as
follows (in thousands):

Year

1991

1992 .

1993 . .

1994

1995

Thereafter .

Annual
Rentals
$ 2,997
1,800
1,286
468
214
521
$ 7,286

(5) SELECTED QUARTERLY FINANCIAL DATA (Unaudited):

The following table reflects selected quarterly financial data for the Corporation and its subsidiaries for the fiscal
years ended December 30, 1990 and December 31 , 1989 (in thousands except share data):

First

Second

Third

Fourth

Quarter

1990

Revenues

$ 125,079

$ 128,173

$ 134,060

$ 133,879

Net income

$ 1,273

$ 1,743

$ 1,868

$ 2,079

Earnings per share

$ .33

$ -45

$ .49

$ .53

1989

Revenues

$ 106,355

$ 115,494

$ 120,030

$ 120,302

Net income

$ 873

$ 1,550

$ 1,694

$ 1,757

Earnings per share

$ 23

$ .40

$ A4

$ A5

388

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
The Wackenhut Corporation:

We have audited the accompanying consolidated balance sheets of The Wackenhut Corporation
(a Florida corporation) and subsidiaries as of December 30, 1990 and December 31 , 1989, and the
related consolidated statements of income, shareholders’ interest and cash flows for each of the three
fiscal years in the period ended December 30, 1990. These financial statements are the responsibility
of the Corporation's management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An auditjncludes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of The Wackenhut Corporation and subsidiaries as of December 30, 1990 and
December 31 , 1969, and the results of their operations and their cash flows for each of the three fiscal
years in the period ended December 30, 1990, in conformity with generally accepted accounting
principles.

ARTHUR ANDERSEN & CO.

Miami, Florida,
February 8, 1991.

Notice of Annual Meeting

The Annual Meeting of Shareholders of The Wackenhut Corporation will be
held on Friday, April 26, 1991 at 9:00 a.m. in the Key Largo Building of the
Ocean Reef Club, Key Largo, Florida 33037

Form KMC

Copies of the Corporation’s Form 10-K Annual Report are available upon
request from the Corporate Relations Department, 1500 San Remo Avenue,
Coral Gables, Florida 33146

Transfer Agent

NCNB Texas. P. O. Box 831402, Dallas, Texas 75283-1402

The Wackenhut Corporation is listed on the New York Stock Exchange, Inc.
The ticker symbol is WAK.

The Wackenhut Corporation

1500 San Remo Avenue Coral Gables, Florida 33146-3009
Telephone: (305) 666-5656/(800) 666-5585
Telex: 153805 WACKENHUT • Fax: (305) 662-7336/(305) 662-7328

389

THE WACKENHUT CORPORATION
CORPORATE RESOLUTION

I CERTIFY that I am the Assistant Secretary of THE WACKENHUT
CORPORATION, a Florida corporation having its principal place of
business in Coral Gables, Florida; that the following is a correct copy
of a resolution duly adopted by the Board of Directors thereof on the
28th day of October, 1991; and that such resolution has been entered in
the minute book of said corporation.

COPY OF RESOLUTION

WHEREAS: The Wackenhut Corporation ("Corporation”), an
international, full-service security firm, has been employed by the
Alyeska Pipeline Service Company ("Alyeska") for over seventeen years
to guard* and protect the approximately 800 mile long Alaska pipeline.
Alyeska, ..in response to the theft of confidential proprietary company
information contracted in March ,1990 with the Corporation to conduct an
investigation to identify the person(s) responsible for the leaking of
these stolen proprietary documents to persons outside of Alyeska. The
Corporation assigned the matter to its Special Investigations Division, a
new entity established in October 1989 to enhance the Corporation's
position as a full-service security firm; and

WHEREAS, serious allegations of wrongdoing, including very
negative reports in the, press, have been lodged against the Corporation
for its conduct of the Alyeska investigation. Specifically, the
Interior and Insular Affairs Committee of the United States House of
Representatives have scheduled hearings on November 4 and .5, 1991 to
investigate various allegations that have been levied against the
Corporation and several of its employees and subcontractors concerning
the conduct of the Alyeska investigation. The Corporation holds
Congress, its committees, and its members in the highest possible regard
and views the congressional investigation with the utmost seriousness.
The Corporation is particularly distressed about those allegations that
the Corporation's employees or agents may have considered or implemented
a plan to investigate one or more members of Congress. Upon learning
from the Congressional Committee about August 7, 1991 of the allegations
of wrongdoing, the management of the Corporation initiated an extensive
internal investigation of the allegations. 1 Management's internal
investigation has been massive in scope, requiring substantial effort by
employees of the Corporation and outside counsel.

The Board of Directors considers those allegations of wrongdoing to be
matters of urgent concern, as those allegations are directed in a
substantial way to an effective discharge of the Corporation's
responsibilities to its shareholders, its clients, and its employees;

390

BE IT RESOLVED THAT, while, the Board of Directors acknowledges the
extensive efforts undertaken and now underway by management to
Investigate the allegations made giving rise to the aforesaid
congressional investigation and hearing, the Board of Directors
concludes that independently of management, it also will investigate and
evaluate those concerns relating to the Alyeska investigation as
expressed by the Congressional Committee, the press, the shareholders,
and management's own internal investigation;

BE IT FURTHER RESOLVED THAT, in order to conduct this independent
evaluation, a quorum of the independent members of the Coard of
Directors hereby constitute and appoint a committee of three outside and
independent Directors, consisting of Frederick M. Glass, as chairman,
Willis M. Hawkins, and Raymond A. Quadt, to investigate, review and
analyze the facts and circumstances surrounding those allegations lodged
against the Corporation relating to the Alyeska investigation;

BE IT FURTHER RESOLVED THAT, this committee working with corporate
management is to present a recommendation, .upon ful^^jji^i^w of all the
allegations of wrongdoing and consideration of necessary remedial
actions, to the full Board of .Directors for corrective policy action and
direction, if any, or in the alternative, if comnittee deems it
appropriate, a recommendation that the Corporation should not remain
active hereafter in covert operations;

BE IT FURTHER RESOLVED THAT, the Board of Directors reserves solely for
itself the final determination of whether the Corporation will continue
to operate in the business of conducting undercover investigations,
including without limiting the generality of the foregoing whether the
existing Special Investigations Division should be abolished.

BE IT FURTHER RESOLVED THAT, this committee, may review information which
has already been gathered by an extensive management-lead investigation,

will be free to gather all information as it sees fit and, to retain
counsel of its choice. To this end, the officers, agents and employees
of the Corporation are hereby authorized arid directed to assist the
committee and to provide it with all information and documents that it
shall request with respect to its evaluation. *

BE IT FURTHER RESOLVED THAT, corporate management is hereby directed to
review the Corporation's existing management policies and procedures
with regard to the Alyeska investigation so as to revisit and review the
Corporation's current ethical standards and 4 to again disseminate those
Policies and Procedures to all employees and agents of the Corporation if
needed. The Committee should also convey to management the evaluation
and recommendation on the performance of current and future managers
involvement in the Special Investigations Division.

IN WITNESS WHEREOF, I have executed this certificate as Assistant
Secretary and have caused the corporate seal of said corporation to be
affixed as of this 28th day of October, 1991.

(CORPORATE SEAL)

Assistant Secretary

391

MEMORANDUM

TO:

DATE:

1/2/91

FROM:

James ?. Rowan

DIV/AREA:

Legal

SUBJECT:

Board of Directors

Resolution No. 9 - Compliance

with Legal, Ethical and Accounting Standards

Enclosed please find copies of the subject Resolution and Policy together
with a Certificate which you are to complete and return to Mr. James P.
Rowan, Vice President, General Counsel and Assistant Secretary by
March 1, 1991.

The Resolution and Policy adopted by the Board of Directors at its
Quarterly Meeting on January 25, 1981, as amended July 30, 1984, and as
further amended January 27, 1990, is intended to specify standards and
reinforce management compliance with required legal, ethical and
accounting standards in the transaction of Corporate business. Your
signature on the Certificate will affirm your understanding of the
Statement of Policy and require you to report any transaction or events
which might indicate non-observance thereof.

Should you have any questions related to the Policy, please contact
me for any assistance I can lend.

Enclosure

74349 *- 30 - 84 >

392

POLICY RELATING TO COMPLIANCE WITH LEGAL
ETHICAL AND ACCOUNTING STANDARDS

It Is the policy of the Corporation and all of its subsidiaries
("Corporation”) to conduct the affairs of the Corporation in keeping
with the highest legal and ethical standards. This policy shall apply
to the parent company and all domestic and foreign operations of the
Corporation in which the Corporation owns more than fifty percent (50%)
of the outstanding voting stock. If a situation should arise, however,
where an affiliate (an operation in which the Corporation has 50% or
less ownership) is participating in an activity in contravention of the
spirit of this policy, the Corporation shall make every effort to cause
such affiliate to cease and desist from such activity. It shall be the
responsibility of the President of the Corporation to make this policy
known to all directors, officers, senior executives and key employees of
the Corporation and its subsidiaries, and to administer compliance with
all aspects of this policy. It shall be the duty and responsibility of
all directors and employees to promptly report any known or suspected
(based upon reasonable grounds to believe) deviations from this policy
statement to the General Counsel's office. The General Counsel shall,
in turn, promptly report any such instances to the Audit Committee of
the Board of Directors. The Audit Committee shall report periodically,
and at least once annually, to the Board of Directors of the Corporation
concerning compliance with this policy.

It is the policy of the Corporation to comply with all domestic and
foreign laws, rules and regulations applicable to its business.
Compliance with generally ^ accepted accounting rules and effective
controls for their enforcement is required at all times. The use of

393

corporate funds or assets, regardless of the amount involved, for any
unlawful or improper purpose is strictly prohibited. Directors,
officers and key employees must consult with the General Counsel of the
Corporation in the event of any question as to compliance with this
policy.

I. PROPER PRACTICES

It is the policy of the Corporation that there shall be complete
candor among members of management and their dealings with auditors,
legal counsel, the Board of Directors and committees thereof.

II. PAYMENTS TO GOVERNMENT OFFICIALS

Payments, the giving of anything of more than nominal value
directly or indirectly, in any amount to any government officials or
other government personnel, or to officials or other personnel of
customers, suppliers or other non-governmental organizations, domestic
or foreign, regardless of motivation, are all viewed by the Corporation
as improper, even where customary or legally permissible, unless fully
disclosed to and previously approved by the Board of Directors, and
where applicable and required, after having been fully disclosed to and
approved by appropriate U.S. Government authorities.

III. CONFLICTS OF INTEREST '

It is the policy of the Corporation that all directors, officers
and employees shall at all times avoid any conflict or appearance of
conflict between their duty to the Corporation and their interest in any
person, business or enterprise, without limiting the generality of this
policy:

It is the policy of the Corporation:

(a) To deal with customers, suppliers, contractors, and all others
doing business with the Corporation solely on the basis of what is in

394

the best interest of the Corporation. No employee shall hold a
financial interest in any supplier, customer, contractor or competitor,
or receive compensation, gifts other than of nominal value or the
benefit of entertainment other than business meals and local athletic or
social events from any of them, directly or indirectly, unless the
employee's Interest has been fully disclosed to and approved by the
Board of Directors.

(b) That no director, officer or employee shall use information
obtained in connection with his relationship with the Corporation for
his own personal benefit, nor shall he disclose to any third party any
unpublished information so obtained except in the furtherance of the
business of the Corporation.

(c) That no director, officer or employee shall enter into or have
financial interest In a contract or transaction with the Corporation,
directly or indirectly, unless the material facts as to such
relationship or Interest have been fully disclosed to and the contract
or transaction has been approved by the Board of Directors.

(d) Not to hire, or enter into any transaction or consulting
arrangement with any corporate director, officer or employee or relative
of such persons or any entity in which any such person has a material
interest, or any person who performs services for any company in which
an officer or director of the Corporation his a material interest unless
the material facts pertaining to such relationship have been fully
disclosed to and the terms of hiring, transaction or arrangement have
been approved by the Board of Directors.

IV. PROCEDURES FOR ENFORCEMENT OF POLICY

(a) The General CounseJ of the Corporation shall establish
procedures for review of material contracts entered into by the

395

Corporation in order to enforce compliance with the requirements of this
Statement of Policy. Where appropriate, he shall require that a
contract or class of contracts contain a provision by which the other
party thereto shall agree that neither the contract nor any payment made
or to be made thereunder is or shall be in contravention of this
Statement of Policy.

(b) The President of the Corporation shall cause copies of this
policy to be distributed to every director, officer and key employee of
the Corporation. Any amendments from time to time made to this Policy
shall similarly be disseminated. The President shall from time to time,
and at least annually, call the attention of each director, officer or
key employees of the Corporation to the provisions of this Statement of
Policy.

(c) Within sixty (60) days after the end of each fiscal year the
President shall distribute to each director, officer and key employee of
the Corporation a form of certificate by which such individual may
affirm his knowledge and understanding of this Statement of Policy and
report any transactions or events which might indicate non-observance
thereof. The General Counsel shall report to the Board of Directors as

to the results obtained from the circularization of such certificates.

396

397

ON TOP OF

AN WR

^ Mirch-Aprll 1990, 1— ut 18~~<fr ARCO Aiaski, Inc

OIL IMPORTS RISE
AT AN ALARMING RATE

A growing dapendenca on
imported oil could push U.S.
demend lor foreign oil to 11
million barrels a day by 1995.
said former Energy Secre-
tary James Schlesinger.

The U.S. imported an
average of seven million
barrels of oil per day in 1989.

In testimony before the
U.S. Senate Energy Commit-
tee, Schlesinger stated oil
prices could increase 30 or
40 percent in this decade.

The U.S. oil import bill then
would exceed the nation's
current annual trade deficit,
he said.

In a recent Mi// Street
Jouma/ article, Edward
Yardem. a Prudentiai-Bache
Securities economist, said
huge oil imports threaten the
nation's prosperity. "The
problem isn't oil consump-
tion. which isn't rising much.
The problem is that U.S.
production is falling at an
alarming rate." Yferdeni said.

Last year. America's bitt tor

imported crude oil end
refined products surged 28
percent to almost $50 billion.
Meanwhile, domestic crude
oil production fell an average
of 553.000 barrels a day. tha
steepest drop on record.

The Department of Energy
forecasts a plunge in domes-
tic crude production from 73
million barrels a day this year
to 6.4 million in 1995 and to
58 million in the year 2000. It
abo predicts imports of crude
and refined products of 73
million barrels s day this year,
9.1 million in 1995 and 99
million in tha year 2000.

As for pricaa. tha Energy
Department's base case (the
forecast it deems most likely)
sees crude oil. in 1989
dollars, rising to $20.40 e
barrel in 1995 and to $2730 a
barrel in tha year 2000.
Based on thee# projactiona.
the import bin would surge to
$8791 billion in constant
dollars in 1995 and to $10096
billion in the year 2000

Ironically, the growing
debate over energy policy
comes at a time when
worldwide oil supplies are
plentiful. In contrast to tha
1970s, whan consumers
were warned that oil supplies
were being depleted, oil
supplies today are ample,
and key fuel products such
as gasoline ere setting in the
US. at 1965 prices, after
accounting for inflation.

Soma 75 percent of the oil
that can be produced at
today's prices ia found in
countriae, mostly around the
Persian Quit, belonging to
the OrgarkzMion of Petroleum
Exporting Countries (OPEC).
It is tha sam# OPEC that
mounted a successful ofl
boycott in 1973, sanding
America’s economy
spiraling into recession.

That boycott worked, even
though the U.S. at that time
produced most of its ON
domestically, importing only
Continued on back pig*

398

OIL SRH COMMISSION SAYS
PREVENTION IS KEY TO PROTECTION

A comprahenaiva preven-
tion policy is the only way to

pfondttif octant and oooH>
ms from oil spills, says the
Ml report of the Alaska Oil
gp* Commission. Tha com-
mission was crsatsd by the
Alaska Stats Ltgisiatura last
spring to analyst tha oil

transportation sysiam in

AM* and to recommend how
oi spite' cantos prevented.

Tha commission's recom-
mondations.il adoptsd,
aould have considerable
impact on tanker safaty.

Tsnksr design changes,
including double hulls,
improved traffic control
systems and an incraasad
smphasitonpfopar
manning and crew training
vathaktyaiamantt.

Alyeska Pipaiins Sarvica
Company, according to tha
commission, has demon-
matad a commitmant to
sderoperationa since the
EaonMUteoilspiHby
sUMhing ntw procedures,
mduding aacortvaaaaH.
now spin response equip-

moot, spssd limits lor

tanksrs end policies thel
tsnksr* stay in dasignatad
traffic lanaawhiia pushing

through ica. Soma of thaaa
reforms wars morn swooping
and cosily than required by
government

The Boon VWdte incident
rafocuaasattantionon
industry's obligation to
operate aafsly and raepon-
sWyOadsiorHiiaUngby
p rkrate i n dust r y la the Aral
and, in many ways, moat
important praoaura point lor
Misty in tha oN transport*
ton system. Government
■ragysatonarto public over-
sight can help safeguard Via
■ystem, but industry ean—
and should — most raptfy
sndsflsctivslyonitsownto
•tetoteh procedures to
•affijoathsrtskofoaspMa.

aoconPng to tha c o mm i s sion.
Tha rsport furthar statad.

- - — — — sa

hot|)Q«*m 10 in® ww
VbManfffmy iB ustfi tsd
industry's ability to mobiliza
quickly after a disaster.
Exxon, though unpraparad
tor sap* so large, responded
tor mon swiftly than any

government agancy. Tha
company oommittad vast
human and ma la r i a l
resources and reportedly
•pant mors than $1 billion
toraapondtothaspiN."

Tha Exxon VtoMar disaster
has awaksnad industry,
govammant and public
intereet on oil spill research.
Tha May i960 raport to tha
praaidsnt on tha Exxon
Vtodar by Transportation
Secretary Samuei Skinner
and Envtronmantal Protec-
tion Agancy Administrator
WOliam Railly bluntly
oondudad that 'tod spin
daanup prooaduroa and
tachnotogiaa ara primitive.”

Thai viaw was achoad by
tha Amsrican Petroleum
Institute, an industry group

Exxon Corporation
President Lao R. Raymond
haaannouncadal990
Control Plan tor continuing
daanup of tha Exxon Vfcttat
olapH in Prince WMiam
Sound. Tha March planning
document. whan approvod
by ths Fadaral On-Scene
CoordMor. wiU strvo as tha
baaia tor a Anal plan tor 1900
daanup

“Our objective ter 1990"
Raymond said, “istocom-
ptote toe appropriate cleanup
work in a way that provides a
further net benefit to the
environment, mmimixaa

^ a*

vno^ooiiniviwntrv

that issued a report caffing
tor n awprtvatainvodmantln
reeeeich and development
of soW reeoorwe iMlfwxto.
Fadaral agsndas art
praparlng rosaarch and
d evelo pm ent initiatives in
apiN response techniques,
lachnology, training and
deployment system*

Thara ia also Incraasjng
totereat in coordination and
collaboration wfthothar
countries, particularly
Canada, to providataaiar
dissamination of raaaarch
results, and lass unneces-
sary duplication of often
Legislation now ponding
in Congrats provides tor the
establishment and funding
of oil spin raaaarch and
davatopmant programs. On#
proposal would creates
Princa William Sound ON
Spill Recovery Institute to
identify snd develop tha beat
technology tor dating with
spMs in arctic and subarctic
marine environment.
AnotherwouideetabNsha
minimum of six regional

the natural recovery tote hat
already begun."

DaumAful uikA y|Aj|Ajt

nsyiTiono, WTvO

Prince William Sound in
aarly March. saM, “I saw
many placaatttet art show-
ing dramatic knpnteamanL
But I also saw soma that ara
not as ctean as wa would Bka
and wd require adffittonal
work. Wre here to do*.
Wa'ra hare to git on wNh tha
task of finishing the Job"

OUMTWQ rnim

un impivwi moviviv

oondkiona resulting hem
last summer's cteaning have
■lowed natural toroes to

Mlsrikiali nn^ai m m

centers to address research
needs.

Qova mm an t aupported
raaaarch and davatopmant
should anaura that public
prioritise are met, th*
government agencies
expected to direct future oil

spil response wil be knowl-
edgeable about new tech-
nologies and techniques,
that regulation is appropriate
and affactiva and that up-to-
date response capabiiitias
are maintained, tha commis-
sion said. Coordination and
cooperation in research and
davatopmant programs art m
tha interest of aN concerned.

Alaska's interests in oil
apW research should focus
on apecffic Alaska marine
habitats, the characteristic*
of ol and dispersant methods
in arctic and subarctic
' waters, prevention raaaarch,
and training programs to
ensure that Alaska response
authorities will be fuNy
prepared to understand and
cope with future spina,
according to the report.

cleaning process over the
winter. Wa have spent more
than $2 billion on tha
cleanup to data."

Otto Harrison, Exxon's
Alaska Operations Manager,
reviewed tha planning docu-
ment, which is tha result of
this winter's shoreline
observations, s ci entifi c
atudtee and planning
conducted by hie staff of
more than 700 Exxon and
contract people, and input
from government agencies.

vfnmuwoocumtni
doa a nt apecify numbers of
shoreline segments to be
cleaned or how many people

Oanewu»rfflwO*rtrA*o»

EXXON ANNOUNCES CLEANUP PLAN

with fishing, and enhances

F 28400 107

399

ALYESKA IMPLEMENTS NEW
TANKER SAFETY PLANS

Tinker safety has bacoma
me focus of public concern
itnce the Prince William
Sound oil spill in Alaska
last year.

Hearings have bean held
in 19 Alaskan communities
tor public discussion of trie
oil industry’s updated tanker
,pi prevention snd response
oion tor the Sound. The
borings included workshops
Oosrgned to provide informs*
,ton about the plan.

According to the plan,

tanker owners and operators

carrying o« through Prince
William Sound will contract
wrth Alyeska Pipeline Service

Company to provide initial oil
spiN response The company
operates the Utidsz Marine
Terminal and the trane-
Alaska pipeline

The plan request that svery
tanker leaving the terminal
be escorted through Prince
WMliam Sound by two tugs
that can assist a tanker in
danger. In addition, initial oil
spill response equipment
must be carried on the larger
tug, an escort vessel.

The ship escort response
vessel system, or SERVS,
manages the fleet of vessels
equipped with booms, skim-
mers, and other oi sp4 equip-

ment. The equipment, and a
trained crew of about 100
people, are to be stationed at
key locations in Prince
WiHiam Sound, an area of
700 square milee.

Tanker crews wW be
screened for a lco hol and, if
necessary, tested. The
captain must be tested one
hour prior to departure.

Stats licensed pUotowtl
guide vessels from the
Marine Terminal to beyond
Bligh Reef. Tinkers may
travel no faster than 10 knots
through the Sound.

Many of the provisions in
the plan went into effect last

summer Regular training
drtta and SKarcises are

required to prepare crews for
emergencies. Additional
tugs and Ashing boats are on
contract to support the
SERVS fleet as needed.

The organization oparatas
24 hours a day. seven days a
weak. The plan requires
manpower and aqutpment
auffleiant to raprdty mmm
more than 30000 feet of
boom and store nearly half a
mMon barrels of ol end veer

Although much of the plan
is already operating, s
complete plan e expected to
bt approved th« year.

Where Does the Public Draw the Line on
Environmental Regulations?

Even after the Exxon Valdez
spill, two in three people would
oppose stricter environmental
regulations that would make
America more dependent on
foreign fuel. The public would
accept higher unemployment
and taxes before increased
dependency.

The Public

opposes Supports It ffw risufi *

Mora US dependency on I or sign oi
Elimmation ol soma jobs
Difficulty for Amancan companies to compete
Higher taxes
Higher product costs

Thts survey was conducted by (he Optra on Research Corporation tts finings art basad on taiap h o na surveys
conducted with a nationwida random probabtkty sampling of 1.021 adults during tha panod of May 12 through May
14. 1989 Tha accuracy of any survay rosults basad on a sample olitus typa and sua m t3 parcantaga points at
tha 95 % /aval of oonhdanca

F2R400108

400

fiPCO Alaska, Inc. O

0«pt.

po 80* 100360
4nch<xag« AK99510

BULK RATE
U S. Postage

PAID

Anchorage. AK
Ptrmrt No. 125

E2 S9696

jotnHcCof

Editor

IMPORTS. . .

Continued from psgc 1

Six percent of its needs from

OPEC

TTWU.& oil-producing
industry now is in its fifth year
of dsdins. Thi American
petroleum Institute (API) says
that th# didin# could be re-
versed if the oil industry could
oplore and develop thi
Coastal Plain of Alaska's
Arctic Nabonal WldMe Rafuga
(ANWR), currantly thi moat
promeing untapped onshore
arts in North America.

Thi ANWR Coastal Plain
« expected to contain at
liast 32 billion barrels of
recoverable oil. That would
make ANWR the third largaat
ol field in North America.
Prudhoo Bay. this nation's
largaat oil field, and Kuparuk.
the second largest oil held,
•re both located lees than
>00 miles weet of the ANWR
Coastal Ptaliv.

Status of Nation's Wetlands

Contiguous US

many other states. Alaska's wetlands remain
Approximately 99.95 percent of Alaska's
are undisturbed.

EXXON

ANNOUNCES. . .

Continued from page 2
and boats will be needed.
Hanteon indicated the levels
would be subetantiafty boto*

19B9 levels since the shore-
line conditions, while not yet
entirety satisfactory, are
vastly improved.

Harrison said Exxon wil
begin cleanup once a final
plan is approved and the
s*«her permits

Coast Guard Rear Admiral
Dave Ciancagflni, the spil's
Federal On-Scene Coor-
dlnalor, has announced that
Exxon wM begin cleanup
work May 1.

Oaneaglini will decide
which cleanup techniques to
use on each beach . He
expects the cleanup tectv
nlquee will be based on
^commendations reached
by coneeneue b etween Exxon
and the agendas.

Source: Coalttlon tor American Energy Security

F2R4Q0109

F2R4001 10

How To Get
ANYTHING

402

“Possibly The Most Dangerous Book Ever Published

403

PO BOX 866 • BOULDER CD 80906 • 303-44*2294

404

405

406

407

408

409

THE POLICE VERSIONS

411

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412

413

Ilf

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414

415

416

417

418

419

177

Procurring Confidential
Telephone Company

Information

OBTAINING TELEPHONE COMPANY LISTINGS, NAMES AND UNLISTED NUMBERS

There are several methods which some persons use to obtain telephone company "Inside"
Information. All of these methods rely upon the Investigator passing himself off as a
person who has the right to said Information.

Because of the complexity of the telephone system In this country this Is octually
accomplished fairly easily. Each telephone office has a standard set-up to pass on
necessary Information to Its employees who have a "need to know". These offices are
protected from outside Intervention simply by secrecy) the aeneral public Is not aware
they exlst r or familiar with the technology needed to access them. Due to the number of
requests and the enormous manpower Involved it Is almost Impossible to "police"
Incoming requests to any degree other than to make certain they fit Into the general
category for such requests.

Needless to say the phone company Is NOT HAPPY with the Idea of outsiders using these
services and they change the access numbers every so often to "freshen" the procedure.

CNA

CNA, or Central Names and Addresses, Is an Inside office manned by telco personnel and
available to linemen, business office personnel ond installers. Basically CNA Is o
computer which has all the numbers and their billing Information for a certain area.
Each CNA office Is usually manned only during business hours and may serve mare than
one area code.

CNA procedure goes like thlss

420

17 $

dtal dial dial ;
ring ring ring
Hellof

HI, this Is John from Pino Street Frames (or San Mateo Business Office, or San Mateo
Phone Store) and I need one on 415-349-6867." (Many repairmen do not give their names,
but some CNA exchanges may ask who you are, or what office you are fromj

"That number Is listed to a Steven Spielberg." (They will spell the listing If asked, and
will report If more than one name appears on the billing record.) u

Note the caller used the area code, as the CNA office may handle more than one area
code. ' 1

In spite of their name, most CNA offices no longer give out the listed oddress, fwwever,
they do have both listed and unlisted NAMES on file and will give both out.

A slower alternative Is to call the number in question from your phone, or a friend's
phone which Is out of the Immediate area (so It Is a toll coll), talk for a few seconds to
give the pen register time to record the number for billing purposes(try to sell them
dance lessons or something) and then contact the phone company business office after
you receive the bill disputing the call. They have to give you the billing name of any call
on your bill, again they will not give the oddress...

If CNA has no listing (rare, but It happens) o wise person gets the number for the billing
‘ office of the prefix of the number he is chasing down (349 In our example) and colls
them.

Each such billing office has Information on phones in their area alone) so the caller would
be from another business office some distance away from the one he Is calling.

"HI, Joe here from San Francisco Public Office. I need a billing name for a customer
that CNA doesnPt have Can you check the listing for 349-68677"

They will give out the name.

It should be noted that the customer service billing Information number Is listed n the
phone book or Js available from 41 1 (or 555-1212) Information assistance.

TO GET AN ENTIRE TOLL USTNG

An enormous amount of Information can be gotten from the last month's toll Information
of a target's bill. Just the numbers and areas called can often by a help, using the CNA
procedure you can piece together an entire scenario of a month's communication.

The bad news is that it's a bit hard to get this) the method most commonly used Is to call
the customer service number for that prefix (as obove) and explain you're having o

dispute with roommates and lost your copy of last month's bill, would they send you

onomvTs

Telco will normally want to send It ONLY to the address listed on the b!ll t but you can
ask that It be sent to your work address, or If the phone is now disconnected, to your
"new" address, BUT YOU MUST BE THE PERSON LISTED ON THE BLL.

421

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REPORT OP INVESTIGATION
SPECIAL INVESTIGATIONS DIVISION

TO*

WAYNE B. BLACK

PROM*

RICK LUND

DATS*

MARCH 30, 1990

RES

TRASH AT TRU8TEE8 POR ALASKA

On March 24, 1990, Investigator Lund visited the dumpster in the
rear of 725 Christianson Drive, Anchorage, Alaska. This building
houses the office for Trustees for Alaska. (Note survey
photographs taken March 22, 1990)

Lund collected 17 items from the dumpster which were initialed,
dated and accompany this memorandum.

The names and telephone numbers will be added to the index.

RL:jl

427.15

THIS DOCUMENT IS ATTORNEY/ CLIENT PRIVILEGE

F2R445Z59

438

TESTIMONY OF
DAVID RMURES

BEFORE THE

UNITED STATES BOOSE OF REPRESENTATIVES
OF THE UNITED STATES CONGRESS
COMMITTEE ON

INTERIOR AND INSULAR AFFAIRS

2226 Rayburn Bouse Office Building
Washington, D.C.

439

STATEMENT OF DAVID RAMI RES

My non* la David Ramirez . I am giving this statamant freely
and without eoareion or threats or promises of anything of value.

Z am currently employed at the Mackenhut Corporation in the
Special Investigation Division ( "SID" ) and my direct supervisor is
Wayne Black. X have been employed with Wackenhut from November,
1990, to present. Prior to going to work for Wackenhut X was
employed as an Executive Protection Officer with DWG Corporation
baaed in Miami Beach, Florida. X was employed with DWG for four
months. My duties included personal protection of the CEO of the
corporation.

Immediately prior to going to work for DWG I was in the Onited
States Marine Corps from 1985 to 1990. During my enlistment I was
trained as an Intelligence Analyst and Signals and Voice
Intelligence Interceptor. Being trained in these areas I was given
Top Secret clearance with access to Special Compartmental
Information sensitive to the government. t

My duties with the Wackenhut Corporation include executive
protection and undercover investigation. Rick Lund also utilised
my experience and background to assist him in analyzing the
possible high threat terrorist situations for Wackenhut 's clients.
This analysis was accomplished through the use of extensive
research, analysis, and computer analysis.

X also provided assistance to Rick Lund with electronic

440

counter-measures , and alaetronio eavesdropping equipment. Mainly,

X provided him support in computer equipment. Lund's knowledge of
the computer software was utilized to set up the "Watch Dog"
Program, which audited, and monitored computer usage of everyone
who had access to the SXD files. Lund had access to the
maintenance program of the Watch Dog system which enabled him to
change, delete or set up new passwords for accessibility and usage
of each file, which included the billing files. Each computer
system had unique programs according to the task assigned to that
speoifio desk. The "Watch Dog" Program is a fail safe program. Xt
would not enable any deletions or changes in the program from any
outside link. The files, in the system could be copied, renamed,
deleted or retrieved by kick Lund, who is the only person that had
access to the maintenance program in the system.

Rick Lund told me that he purchased his electronic
surveillance equipment through export companies. X have seen in
Rick Lunds' possession at least four telephone "pen registers” in
use and, in one case, X was involved in maintaining them. Pen
registers are illegal for use in this country. When in use the pen
register can audit telephone numbers dialed frph and to a specific
number, which also included the time, date and length of the
conversation of each call. The calls w^re printed on a register
tape.

Rick Lund and Janet Lago were in charge of the SXD billing.
Only Rick Lund had access to maintenance which involved securing
all billings and monthly dumping into the system. (The term

441

"dumping" is used in the computer field when file* are taken from
a hard drive and copied onto floppy disks for backup and storing
purposes •) Rick Lund was the only person that had access in
dumping files. Zt is my belief that Lund designed the system in a
manner that would insure that only he could retrieve the
information if it became necessary to erase case files.

Although I had no personal involvement in CASE 427, regarding
Charles Hamel, I became aware of it in August, 1991, when the
Congressional letters were sent to Wackenhut. Z knew from general
information at the company, and from Gil Hugarra that Congress had
reguested all of the time records of the investigation, and that
those records were being reviewed and edited for removal of other
case information. Z also was aware that Wayne Black was very
concerned about the Congressional inquiry involving his actions and
those of Rick Lund,

Zn October, 1991, Z spoke to Gus Castillo about the matters
regarding the Congressional investigation of Wackenhut. Z told him
that X was extremely worried about being terminated from my
employment with Wackenhut because Black was becoming increasingly
critical of my friendship with previous co-workers . Zn fact, as
recently as Friday, my Wackenhut issued "beeper* was being
monitored and calls intercepted. <^us told me about the
Congressional investigation and, several weeks later, Z talked to
Billie Garde and then contacted the Congressional investigators
about the information I have described in this statement.

This Is not a comprehensive statement of all the detailed

442

improprieties at the Wackenhut Corporation, Special Investigation
Divisions. X have not taken any documents from Wackenhut, nor
provided any other information about any other cases to
Congressional investigators.

State of Virginia, sss

David Ramirez, being first sworn according to law, states that
he has read the foregoing Affidavit by his subscribed, and the
contents thereof are true to the best of his knowledge, information
and belief.

DAVID RAMIREZ

1991.

Subscribed and sworn to before me this 3rd day of November/

Notary Public

My Commission Expires!

<psh*. 3 /,

443

NEMO

TO: PILE

FROM! WAWI B. BLXC

OATZl NAY 18, 1890

BE: MEETING ON VITB INVESTIGATORS ON MAY 18, 1990

On May 18, 1990, I net with Invast iga tors Contreras, Jacobson and
Lund. Also present vas Janet Lago. We revieved the file and
exhibits for presentation to Pat Wellington's upcoming during May
23rd in San Francisco. I reminded all present that the focus of
the investigation was the person (s) stealing documents from Alyeska
and not necessarily Hamel or Congressman Miller.

I expressed concern that ve maintain the integrity of the
investigation and confidentiality. I mentioned that it vas our
belief at this time that Hamel vas using Miller's influence to
enhance his position with Exxon. That is, he may possibly be
extorting Exxon by using Miller and Miller's committee as a threat.

As our investigation progresses, hopefully ve will have an
opportunity to either disprove or prove Hamel's allegation that
Miller is avare that Hamel's sources are stealing proprietary
information from Alyeska.

WBB: jl
427. ff

THIS DOCUMENT IS ATTORNEY/ CLIENT PRIVILEGE

F2P445239

444

S==CSAL INVESTIGATES ClViSiCN

confidential

TO: J. P. WELLINGTON

FROM: W. B. BLACK : fftT'

DATS: KAY 22 f 1990

RE: EXECUTIVE SUMMARY OF INVESTIGATION

"<=V

On March 1, 1990, we initiated an investigation at your request to
determine the scope of the problem involving theft of proprietary
documents from the Alyeska Pipeline Service Company and identify
those responsible. At that time, you suspected, but had no
conclusive proof, that Alyeska employee Bob Scott had given
proprietary information to Charles Hamel. In return, Kamel had
given the information to The Wall Street Journal and other media.

RESULTS . We have been able to positively identify Bob Scott as
one of Hamel's sources. There is the possibility that Scott may be
violating federal law, that is, forwarding stolen material via the
U. S. Mail from Alaska to Washington, D.C.

We have created The Ecolit Research Group which resulted in three
Special Investigations Division investigators being in an
undercover capacity with Charles Hamel. The results have been:

Professionalism With Integrity *•*

F2R413419

445

Page 2

J. P. Wellington
May 23, 1990

(a) The recovery of documents stolen from Alyeska.

(b) Admissions by Hamel regarding Scott and others, yet
unidentified.

(c) The discovery that person (s) unknown inside the Alyeska
legal department are supplying information and documents
to Hamel or one of his other sources.

(d) Admissions by Hamel that he is doing what he is doing for
personal gain only. Admission by Hamel that documents
are stolen.

(e) We have been able to observe boxes of Alyeska documents
in Hamel's possession in Washington alone.

INVESTIGATION IN PROGRESS. We continue to have weekly, almost
daily, contact with Charles Hamel. Hamel plans to visit The Ecolit
Group in Miami, followed by reciprocal visits to Washington and
Alaska. Ongoing telephone toll analysis reveals sustained activity
between Hamel and others involved. As new numbers develop
subscriber information will be obtained.

INVESTIGATIVE PLAN. Our general plan is to proceed on the present
course having continued contact with Hamel. As we gain his
confidence, he continues to divulge information critical to
Alyeska. Of great concern are Hamel's recent admissions regarding

THIS DOCUMENT IS ATTORNEY/ CLIENT PRIVILEGE

F2R413420

446

Page 3

J. P. Wellington
May 23 , 1990

his "source” inside Alyeska' s legal department. Our ongoing
investigative plan involves the following:

(a) Continue undercover activity with Hamel.

(b) Identify sources of stolen documents in the legal
department of Alyeska.

(d) Test for leaks in corporate headquarters .

(e) Test for recording devices during board meetings or
meetings about Hamel.

(f) Continue telephone toll analysis, charting activity by
event .

How can Alyeska best respond to the information gained from this
investigation? Our investigative results could be and should be
used to stimulate additional activity, both undercover and
administrative. You now know that with regard to Hamel, your legal
department is not totally secure. Employee interviews and
terminations could be initiated at the appropriate time.
Additional document security measures should be taken immediately.
Consideration of legal action, either civil, criminal or both
should be considered.

THIS DOCUMENT IS ATTORNEY/CLIENT PRIVILEGE

F2R413421

447

Page 4

J. P. Wellington
May 23, 1990

We are concerned about Hamel's allegation that he and George Miller
(D-California) are friends and that he feeds Miller information
about Alyeska from stolen documents. At the same time, Hamel
admits that his only goal is to be reimbursed by Exxon or Alyeska
for monies he feels owed.

CONCLUSION. We feel Hamel is truthful with our undercover
investigators when he repeats his purpose for release of documents
to the media, the Alaska Attorney General's Office, the Department
of Justice and even our research group. Hamel has never indicated
that he is interested soley in providing information to a
congressional committee to assist in any investigation. Likewise,
we do not know if Congressman Miller or any member of his committee
has requested Hamel or his sources to steal or otherwise obtain
stolen documents from Alyeska. We are concerned that Hamel may be
using his alleged relationship with Miller to extort or blackmail
Alyeska or Exxon.

We have carefully reviewed the legal discussion found in Section 14
of this report dealing with the likelihood of unofficial

THIS DOCUMENT IS ATTORNEY/CLIENT PRIVILEGE

F2R4 1 3422

448

Page 5

Pat Wellington
May 23, 1990

involvement on the part of Congressman George Miller. While the
cursory legal opinion was necessary, ve feel no action need to be
taken at this time. Surely, future contact with Hamel will result
in additional, more clarifying information about Congressman
Miller. If and when Hamel even hints that he (Hamel) is assisting
or acting as an agent of Miller, we will cease our undercover
approach.

WBB : j 1
427. gg

THIS DOCUMENT IS ATTORNEY/CLIENT PRIVILEGE

F2R413423

449

PRELIMINARY INFORMATION

450

PZR41342S

451

INFORMATION FLOW

452

EXHIBIT LIST

1. THREE PIECES OP PAPER GIVEN TO INVESTIGATOR RICKI

JACOBSON BY CHARLES HAMEL ON MARCH 24, 1990.

2. ITEMS TAKEN FROM THE TRASH OF BOB SCOTT BY INVESTIGATOR

RICK LUND.

3. AN ENVELOPE FROM BOX 706, ZIP 99686, ADDRESSED TO MRS.

GLORIA EWELL IN WASHINGTON, D.C. THIS ITEM WAS RECOVERED YB
INVESTIGATOR WAYNE BLACK AFTER IT WAS DISCARDED BY CHARLES
HAMEL.

4. PERTINENT PAPERWORK DISCARDED BY CHARLES HAMEL AND

RECOVERED ON MAY 2, 1990, FROM THE TRASH OF HAMEL IN

ALEXANDRIA, VIRGINIA BY INVESTIGATOR RICK LUND.

5. A FACSIMILE TRANSMISSION DATED AND RECEIVED ON MAY 14,

1990, FROM CHARLES HAMEL TO WAYNE JENKINS.

6. AN ALYESKA PIPELINE SERVICE COMPANY WORK REQUEST DATED
APRIL 15, 1990 AND APRIL 17, 1990. THIS EXHIBIT IS A
STOLEN ALYESKA DOCUMENT THAT WAS RECOVERED FROM THE HOME

. OF CHARLES HAMEL BY. INVESTIGATORS BLACK AND LUND ON
MAY 16, 1990.

7. AN ALYESKA CORPORATE OPERATIONS ADMINISTRATIVE EXCHANGE
REPORT DATED MARCH 27, 1989. THIS DOCUMENT WAS RECOVERED
FROM THE HOME OF CHARLES HAMEL BY INVESTIGATORS LUND AND
BLACK ON MAY 16, 1990.

8. TWO ALYESKA STOLEN MESSAGES RECOVERED FROM THE HOME OF

CHARLES HAMEL ON MAY 16, 1990, BY INVESTIGATORS LUND AND

BLACK.

9. A LEGAL MEMORANDUM FROM CARLOS K. GOODMAN TO CHARLES C.

IVIE. THIS DOCUMENT WAS GIVEN TO INVESTIGATOR WAYNE
BLACK BY CHARLES HAMEL ON MAY 16, 1990.

10. A FACSIMILE TRANSMISSION DATED MAY 17, 1990, FROM CHARLES
KAMEL TO WAYNE JENKINS.

11. A FACSIMILE DATED MAY 18, 1990, FROM CHARLES HAMEL TO
WAYNE JENKINS. THIS IS A COPY OF THE WALL STREET JOURNAL
EASTERN ADDITION DATED MAY 18, 1990, REGARDING ALYESKA.

F2R4 1343?

453

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May 22, 1990

Mr. J.P. Wellington
Director of Security
Alyes/.a Pipeline Service Co.
c/o Mr. Wayne 3 lack
Wackenhut Corporation
Special Investigations Division
1500 San Reno Avenue
Coral Gables, FL 33146

Re: Alveska Pipeline Service Co.

Nation <?? ?vPi.sr, Pgpyrcgnvs/

Dear Mr. Wellington:

The lav firm of Richey, Munroe, Fine & Goodman, P.A. has been
asked to provide a preliminary assessment concerning a possible
investigation into allegations that a U.S. Congressman has been
encouraging and/or requesting the theft of confidential attorney-
client, trade secret ar.d proprietary documents frcm the Alyeska
Pipeline offices. In particular, we have been advised that Alyeska
is considering an investigation which may use covert operatives
who may assume different identities when dealing with the Congress-
man.

Our firm was first provided with some background information
about the investigation on Thursday evening, May 17, 1990, when we
met with Wayne Black. Based on the information provided to us by
Wayne Slack, we believe that an undercover investigation of these
sensitive allegations is risky. Although Alyeska is more than
justified in wanting to vigorously investigate these allegations,
there are several significant, difficult issues underlying the
proposed plan. We believe that neither Alyeska nor its agents

f 29 4 13*27

454

Mr. J.?. Wellington
c/o Mr. Wayne 3 lack
May 22, 1990
Page 2

should approach the Congressman as parr of an undercover investiga-
tion until these issues have been adequately researched and
analysed and until you make an informed policy judgment that the
potential benefits are worth the risks and associated costs.

As explained later in this memorandum, pursuing an undercover
operation "against a Congressman in a matter which he may claim
relates to a Congressional investigation may expose the company and
its investigators to a claim that the federal obstruction cf
justice statutes are being violated. These statutes are extremely
bread. Although Alveska and its expert investigators might be able
to tailor the proposed undercover operation so that it does not
violate these expansive federal criminal statutes, the Congressman
could easily raise the specter of a criminal violation. Regardless
of the legitimate motivation underlying the proposed investigation,
it will be exceedingly difficult to arrange an undercover investi-
gation which could net be made to appear to be interfering with a
Congressional investigation.

The problem arises because the proposed undercover investiga- .
tion is a private operation. Making misrepresentations to a
Congressman as part of an official law enforcement investigation
is significantly different than making those misrepresentations as
part of a purely private operation. Similarly, having an under-
cover operative make misleading statements to a private individual
is distinct from making those identical misrepresentations to a
Congressman who can claim he is pursuing a legislative investiga-
tion.

In lieu of a private investigation using undercover agents,
you may want at a later time to present the allegations and your
proposed plan to the F5I and request its assistance. We recognize
that the FBI may be reluctant to look into the allegations. We
also appreciate that the F3I bureaucracy is inherently inefficient

which obviously interferes with an ability to monitor and

supervise a streamlined undercover investigation. Permitting the
FBI to supervise the undercover investigation also leads to a loss
of control. Nevertheless, we believe that .it is an option which
should simultaneously be considered with the internal operation
when the time is right.

Assuming the F3I is willing to investigate the allegations
against the Congressman, Alyeska may well be able to persuade the
FBI to use the same undercover operatives it was considering for
the purely internal operation. As you nay know, Mr. Wackenhut and
Mr. Wayne* Black have significant connections with the FBI. They
both enjoy a good reputation with the FBI. Accordingly, their
involvement might enhance the possibility of persuading the FBI to

PlC - £Y.

;ns?CE, Fine S Gocoman, P.A.

F2.P4 12423

455

Mr. J . P • Wellington
c/o Mr. Wayne Black
May 22, 1590
Page 3

investigate the allegations against the Congressman and to
authorize an undercover operation.

We have been told that sensitive, confid